Securities and Exchange Commission Drops Probe Into RF Industries
The worldwide downturn in spending in the wireless telecom industry caused San Diego-based Wireless Facilities Inc. to report its first quarterly loss since it went public in late 1999.
WFI, a manager of wireless telecom networks, said it had a net loss of $8.5 million on revenues of $52.7 million, compared to a net profit of $6.7 million on revenues of $43.3 million in the like period of the previous fiscal year.
On a pro forma basis, excluding the effects of goodwill and charges related to seven acquisitions made last year, Wireless Facilities lost $4.9 million in the quarter, the company said.
Thomas Munro, WFI’s president, said like every firm in the wireless telecom segment, the company was hurt by the sudden downturn in spending on wireless networks that began last year. “Several projects that we anticipated would begin in the quarter were either canceled or postponed,” he said.
He said the company expects to see a modest uptick in revenue growth for the second quarter. For 2001 fiscal year, Munro estimated annual revenues would be in the range of $215 million to $240 million.
A big chunk of WFI’s recent quarterly loss was attributed to a pre-tax write-off of $4.6 million relating to a single broadband wireless customer, Advanced Radio Telecom, which filed for bankruptcy protection. The loss on that contract included $3.5 million in lost receivables and a write-down of $1.1 million on the value of stock it received from ART, the company said.
WFI, which has about 2,000 employees and customers in more than 100 countries, saw its Nasdaq-traded stock slide after the news and was traded at $6.36 on May 15. Its 52-week range was between $84.81 and $3.31.
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SEC Drops Inquiry:
San Diego-based RF Industries Inc., a manufacturer of coaxial connectors and other cable equipment used in the telecommunications industry, said the West Coast office of the Securities and Exchange Commission has dropped an inquiry into the company and recommended no enforcement action be taken.
The company revealed in February the SEC had requested a mountain of documents weighing about 250 pounds, and was conducting an investigation that started last September.
“It’s like a millstone around our neck has been removed,” said CEO Howard Hill in an interview from a Las Vegas trade show.
“It’s been a real strain wondering what’s going on. All we suspected was what our attorneys told us, that it might have something to do with a disgruntled employee.”
The SEC doesn’t reveal what the issue or possible illegalities it was looking into, but in RFI’s 10-Q statement issued in February, the company said the SEC order indicated it was looking at either persons or entities “who may have made improper statements regarding the company’s order backlog, manufacturing and design capabilities and ownership of the company’s stock,” and was carefully reviewing the company’s financial condition.
While the SEC can resurrect the investigation at any time, Hill is interpreting this to mean, “nothing is there, and we’re moving forward.”
RFI will shortly report its second-quarter results, which Hill says are “good,” bucking the trend of many high-techs. In its first quarter, RFI reported net income of $245,000 on sales of $2.3 million, up from a profit of $222,000 on revenues of $1.7 million in the like period of the previous year.
RFI traded at $3.38 at the close of trading May 15, and had a 52-week range between $7.47 and $2.
Cubic Has Higher Profits:
Cubic Corp., the San Diego-based tech firm with defense and transportation businesses, reported net income of $4.9 million or 56 cents per diluted share for its second quarter ended March 31 on revenues of $123 million compared to a net of $4.5 million or 51 cents per share on revenues of $145 million for the like period in the previous fiscal year.
CEO Walter Zable said the decline in sales during the last quarter was centered in the transportation division, and the higher profits were caused by increased profit margins in contracts in that segment. He said sales were expected to improve in the second half.
For the first half of the firm’s fiscal year, net income was $9.6 million, or $1.08 per share, on sales of $243 million compared to a net profit of $8.6 million or 97 cents per share on sales of $260 million.
Cubic’s defense segment had a slight rise in sales for the first half compared to the prior fiscal year, mostly due to acquisitions made in the prior year and growth in the company’s computerized battlefield simulation and training business, the company said.
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Showing Some BakBone:
BakBone Software, a year-old designer and maker of storage management software, said it completed a $15 million round in Canadian dollars last week. That’s $9.6 million in U.S. cash.
The company said it intends to use the money, which was all put up by management and existing investors, for expanding sales and marketing, debt reduction and general working capital.
BakBone said it has begun steps to register as a foreign registered entity as a precursor to becoming a full reporting entity in this country.
“When this is approved it will become easier for us to market our securities in this country,” said BakBone spokesman Steve Friedberg.
The firm went public last March after it conducted an IPO on the Toronto Stock Exchange, raising $37 million Canadian in the process.
BakBone has 160 employees worldwide including 110 employees at its San Diego headquarters. It has three other major offices in Washington, D.C., Tokyo and the United Kingdom.
SupplyPro Buys Ohio Firm:
SupplyPro Inc., a San Diego-based maker of Web-enabled cabinets for obtaining industrial supplies such as cutting tools and gloves, said it completed the acquisition of Cincinnati-based Vertex Technologies Inc., a pioneer in the development of automated supply chain solutions.
Terms of the purchase were not revealed. SupplyPro, which has attracted about $35 million in investment since its founding in 1998, said the purchase brings together the two leading firms in an $11 billion market. SupplyPro has revenues “in the seven figures,” and is not profitable as yet, a spokesman said. It has 85 employees, including 65 in San Diego.
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Altris Reports Loss:
San Diego-based Altris Software, a maker of document management software, said it lost $89,000 for its second quarter ended March 31 on revenues of $3.3 million, compared to a net loss of $565,000 on revenues of $1.7 million for the like period in the previous fiscal year.
For the six months, Altris reported a net profit of $38,000 on revenues of $6.2 million compared to a net loss of $1.2 million on revenues of $3.3 million.
Altris CEO Roger Erickson said the company’s quarterly revenue growth, up about $400,000 from its first quarter, is impressive since it was achieved in an environment where many competitors lost money. While the economic downturn has slowed IT purchases, Altris was able to increases sales, receiving orders from its customers, he said.
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