Iona misses forecast, expects better results in Q2

'Complex transaction' to blame

Pound Sterling

Software giant Iona said it missed its quarterly revenue expectations on Tuesday because of a "very complex transaction".

The Dublin-headquartered company reported a $15.6m turnover for its first financial quarter - below its $17m expectation.

However, Iona said it had deferred recognition of $1.6m in revenue "associated with an isolated and very complex transaction. The transaction was completed and the customer paid [Iona] in full during the quarter".

If this transaction with an as yet unnamed Iona customer had been included, revenues would stand at $17.2m, slightly more than $16.9m recorded one year ago, but still down sequentially on revenues of $22.8m recorded in the final quarter of 2006.

The service oriented architecture (SOA) software business made a net loss of $2.8m, or $0.08 per share. This figure fell to $0.04 per share when a $1.4m share compensation scheme was included.

Nasdaq-listed Iona's chief executive Eric Zotto said the deferred revenues affected the company's profit and loss account, but cash flow was not affected. In this respect Iona equaled expectations with a cash balance of $56m.

Zotto had expressed disappointment with the company's performance when releasing preliminary financial results earlier this month - a move no doubt designed to cushion the blow for Iona's understandably skittish investors. On 5 April Zotto said he expected better results for the second quarter of 2007, with total revenues to range between $20m and $22m.

The company expects total expenses for the second quarter of 2007, including cost of revenue, and operating expenses, including those related to recent acquisitions, to be in the range of $21.2m to $21.7m.

"Demand for our products is strong and continues to expand," said Zotto on Tuesday. "Iona's customers, the large IT organisations typically found in global 2000 companies, are increasingly adopting SOA and we are well positioned to help them accomplish their goals. The consistent execution of our stated strategy continues to deliver real value to our customers and our shareholders."

Zotto added that Iona's recent acquisitions of loss-making British data management firm C24 in March and, more recently, open source business integration firm LogicBlaze in April, were important strategic investments. And with $56m in the bank, Zotto hinted at additional acquisitions "to make the additional strategic investments required to continue to grow our business".

Iona, which was first established on the campus of Trinity College, Dublin, in 1991, employs 360 people worldwide. Its offices are in Ireland and Waltham, Massachusetts. One hundred and nineteen staff are employed at the firm's headquarters in Dublin.

Shares in Iona were down $0.15 at $5.68 at close of business on Monday.

Copyright © 2007, ENN

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