Cubic Corp. Reports Bad News for Fourth Quarter
Portera Systems, based in Campbell in the Silicon Valley, acquired Maxwell Business Systems, a wholly owned subsidiary of San Diego’s Maxwell Technologies, for an undisclosed price that included cash and stock last month.
Both tech companies operate in the same general sector, providing subscription-based business software and business services over the Internet.
Most of Maxwell Business Systems customers are government contractors and include AT & T; and Lockheed Martin, said Gary Steele, Portera’s CEO.
“Portera has long viewed government contractors as an attractive target market,” Steele said. “Analysts estimate that government spending on professional services will exceed $14 billion in the next two years.”
What Maxwell and Portera offer is technology that allows the management of people-related projects over the Internet as opposed to paper reports, making the reporting more efficient, and managing costs more effectively, Steele said.
This is Portera’s second acquisition. It purchased Seattle-based Invisic, a 50-person firm that provides contract administration and billing services, last March.
Steele said there are no plans to move Maxwell, which has 45 employees, north. Instead, he expects the business should expand at its current location. The company will be renamed Portera GC Inc. and have field operations in Reston, Va.
Steele declined to reveal either MBS’s or Portera’s revenues. Formed in 1998, Portera also announced in December it attracted $14.3 million in VC funding from American Express Financial Corp., as part of a $50 million round of financing closed in the third quarter. To date, the firm has raised more than $100 million in private financing, including from Kliner Perkins and Oracle.
Portera has about 310 employees now, up from 75 at the end of 1999.
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Cubic Posts Loss: Cubic Corp., whose dual business model of defense and transportation systems has paid off well in recent years, released some bad news for its fourth quarter relating to overcharges on one of its defense contracts with the U.S. military. Due to what Cubic described as “significant and numerous” changes to a training program called Multiple Integrated Laser Engagement System, or MILES 2000, Cubic was forced to take an after-tax charge of $18 million. That hit resulted in a fourth-quarter loss of $12.7 million for the period ended Sept. 30, compared with a profit of $4.4 million for 1999’s fourth quarter.
For fiscal 2000, Cubic posted a meager net profit of $674,000 on sales of $531.5 million, compared with a net of $14 million on sales of $510.7 million.
Cubic said it expects to recoup some or all the overcharges on the contract in the future, and eventually turn the MILES program into a profitable one. CEO Walt Zable said the experience with the military training system is similar to what happened with a data links project that also had heavier investments and incurred early losses, but is now profitable.
“Aside from the defense systems subsidiary, the rest of the defense segment and the transportation segment increased profits for the year. The company remains in a very strong financial position and has exciting prospects for the continued growth in both our defense and transportation segments,” Zable said.
However, the market didn’t take kindly to the news, and on the first day of trading on Dec. 26, CUB dropped 3 points to $26.50, and continued to lose, ending trading on Dec. 29 at $25.81. Its 52-week range was $17.31 to $38.62.
Leap Secures $250 Million: San Diego-based Leap Wireless International Inc., the wireless carrier that spun off from Qualcomm Inc., said it received a commitment for up to $250 million in common stock equity financing from Acqua Wellington North American Equities Fund, Ltd. The agreement allows Leap to sell its stock to the Wellington fund at a discount of 4 percent to 5.5 percent of its market value. Leap will use the funding for new acquisitions and spectrum purchases in its ongoing expansion of its Cricket wireless services into new markets.
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PriceSmart Expansion: PriceSmart, which operates discount warehouse stores in overseas locales, said it opened 15 of the 17 stores it directly operates over the past 18 months. Most of the activity has occurred in Central America and the Caribbean, including the Dominican Republic where it opened its last store in October.
In addition to the stores it directly operates, it also has six franchised stores in China, the Philippines and Saipan.
Because of the additional stores, PriceSmart more than doubled its revenues for its first quarter ended Nov. 30 to $108.2 million from $53.7 million in the like period of the previous year. Net earnings for the quarter were $846,000 but $781,000 of that amount came from the sale of excess real estate related to the expansion binge, the company said.
For fiscal 2000 that ended Aug. 31, PriceSmart lost $5.4 million on revenues of $304.6 million, compared with a loss of $3.9 million on revenues of $108.8 million.
PSMT, which is traded on Nasdaq, recently traded at $32; its 52-week range was between $26.75 and $49.25.
E-mail Allen with any high-tech financial news at mallen@sdbj.com.
