Novatel Again Reduces Its Revenue Estimates
Sorrento Mesa-based nStor Technologies, a Nasdaq-traded maker of data storage equipment, has replaced president and CEO Larry Hemmerich and is in talks with an unnamed investor to buy 45 percent of the firm.
In addition, the company said its total employment has been reduced to about 100 people, including 70 at its Sorrento Mesa headquarters.
Last week, Chief Financial Officer Jack Jaiven said the firm instituted two staff cuts, one last month and another in January. At the end of 2000, the firm had about 170 employees.
In addition to the San Diego office, nStor has facilities in Lake Mary, Fla., and several sales offices.
Hemmerich, who headed nStor for about a year, resigned for “personal reasons” and was retained as a consultant on a six-month contract, Jaiven said.
Taking over as president and COO is Thomas Makmann, who had been hired by Hemmerich several months ago as vice president of business development.
Makmann, who was not available for comment, was said to have more than 30 years in top management positions in high-tech start-ups and turnaround situations. His last job was with Hammer Storage Solutions based in Newark, Calif.
The company also named its chairman Irwin Levy as acting CEO. Levy is nStor’s largest shareholder with about 20 percent of its shares.
In addition to the management reshuffling, nStor said it received an offer from an unnamed investor to purchase about 45 percent of the company for $12 million.
Whoever invests into nStor is buying into a company that has been reeling over the past year. For its most recent fiscal year, it lost nearly $22 million on more than $40 million in sales. For its first quarter, it reported a net loss of $3.6 million on $6.2 million in sales compared to a profit of $3.4 million on $12.5 million in sales for the like period in the prior fiscal year.
Those kind of numbers caused a sell-off of the thinly traded stock, driving down the price from above $3 about a year ago to 45 cents as of July 2. Its 52-week low was 30 cents.
The company also said it has signed a new contract for its products with NEC, the Japanese-based computer maker, but did not say how much the contract was worth.
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Novatel Lowers Estimates:
Novatel Wireless Inc., the San Diego-based maker of wireless data modems and software for PCs and personal digital assistants, or PDAs, said it won’t hit earlier revenue estimates for its second quarter , the second consecutive time it has had to reduce its estimates.
“Sales in the second quarter were weak, reflecting the slowdown in the technology spending for PDAs in particular, but order input was strong,” said CEO and chairman John Major.
The company said sales for the second quarter ended June 30 will likely be between $12 million to $13 million. That’s down from the $19.7 million Novatel did in the first quarter.
Major said the revenue estimates exclude substantial shipments to a particular unnamed customer in which “there are payment concerns.”
Novatel makes high-speed wireless products for the cutting-edge space of wireless computer access, an industry that has been throttled by an overall decline in spending.
The company said it expects to incur a “pro forma loss” between 18 to 20 cents a share, but its actual net loss, which includes all the kinds of expenses many companies routinely exclude these days, is hard to determine.
For its first quarter, the net loss was $25.3 million or 47 cents per share compared to a net loss of $7.4 million, or 74 cents per share for the like period in the previous fiscal year.
Novatel, which has about 200 employees, reduced its staff in the first quarter by 100 full-time positions and took a restructuring charge of $3.9 million.
Novatel, traded on Nasdaq, closed at $2.09 on July 3. Its 52-week range is between $1.75 and $16.25.
U.S. Labs Gets $8 Million:
U.S. Laboratories, the San Diego-based provider of engineering services to the construction industry, completed a redemption of stock warrants last month, raising $8 million in the process. The capital raised from the exercised warrants will be used to pay down a portion of the company’s credit line and finance additional growth, said CEO Dickerson Wright.
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Z57.com Opens Office:
Z57.com, a Mira Mesa-based Web shop developer launched in 1998, said it opened a second office in Carlsbad at 5431 Avenida Encinas to handle its primary market of real estate and insurance agents.
Steve Croll, vice president of sales/real estate division, heads up the North County operations. Jesse Hill, the sales manager, will run the office’s sales team. The firm said it expects to add 18 full-time employees by the end of July.
InsureHiTech Opens Office:
InsureHiTech, a Princeton, N.J., insurance brokerage focused on New Economy firms, opened a sales office in San Diego recently.
The office was part of a planned expansion made possible by $10 million in funding from JP Morgan Corsair II Capital Partners LP, a $1 billion private equity fund.
The brokerage, a wholly owned subsidiary of Insurance Revolution, Inc., sells its commercial property and casualty insurance services primarily to high-tech, biotech, venture capital and environmental industries.
The San Diego office will be managed by Harold Howell, who has more than 10 years in the commercial business insurance industry.
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GreyStone Faces Delisting:
GreyStone Digital Technologies Inc. said it received notice in April that it fails to comply with certain minimum requirements involving net tangible assets for its continued listing on the Nasdaq exchange. The company’s stock also has traded below the $1 minimum price for 30 consecutive days. Greystone, which makes 3-D digital software, traded at 19 cents as of July 3. Its 52-week range is between 8 cents and $6.50.
Mitek Systems Signs Up Banks:
Mitek Systems, a San Diego-based maker of document imaging software, said two community banks, Sutton Bank of Attica, Ohio, and first National Bank of Crystal Falls, Mich., purchased its check imaging system. The banks’ combined assets are $263 million.
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