NetManage's Losses Grow as Sales Decline in the First Quarter

Published: May 29, 2007

by Timothy Prickett Morgan

While NetManage, a maker of host connectivity and legacy application modernization tools for i5/OS and mainframe servers, managed to close some high-profile deals in the first quarter ended March 31, the company nonetheless saw revenues fall off, pushing NetManage into a loss.

NetManage, which has resisted the temptation to be acquired so far and which remains a publicly traded company, reported sales were down by 9 percent in the first quarter to $7.7 million. While services fees rose by 2 percent to $5.9 million in the quarter, software license sales fell by 35 percent to $1.8 million. With costs rising to deliver those licenses and services and a restructuring charge of $2.2 million, NetManage widens its loss to $3.6 million, or 37 cents a share, compared to a loss of $745,000, or 8 cents a share, in the year ago quarter.

"The first quarter is always the most seasonally challenging, and while service revenues increased from the prior year period, we were disappointed in license revenues for the quarter," said Zvi Alon, chairman, president, and chief executive officer at NetManage in a statement accompanying the financial results. "During the quarter, we consolidated our research and development activities to Israel, which we believe will result in significant future cost savings." He added that the company was focused on boosting sales and improving operating efficiencies to move back into the black.

NetManage exited the quarter with $28.9 million in cash and equivalents, a little bit more money than it had at the end of 2006.

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NetManage's First Quarter Disappoints

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