CALGARY, Alberta-CSI Wireless Inc. saw its stock take a 20-percent plunge on the Toronto Stock Exchange Thursday after the designer and manufacturer of wireless global positioning systems products announced that third-quarter results will include a loss of more than $4.7 million.
In 2004, CSI’s third-quarter revenues came in at almost $20 million, whereas this year’s third-quarter revenues are expected to be more than $9.9 million.
The stock opened Thursday at $1.38 per share, where it traded after its decline Thursday.
CSI also announced that it recently received about $13 million of new purchase orders for its GSM and TDMA desktop cellular telephones, which the company said it had anticipated closing on earlier in the third quarter and in the first quarter of 2006.
“We are very disappointed that a number of factors have contributed to an unimpressive third quarter for the company,” said Stephen Verhoeff, president and chief executive of CSI. “Although we commenced the year with very strong momentum in our GSM desktop cellular telephone business, we have experienced sales cycles that are much longer than we had expected, and this will have a particularly significant impact on the third quarter. However, the outlook for sales of CSI’s desktop cellular phones in the remainder of 2005 and through 2006 is very exciting, based on the recent orders received and on a number of very significant international opportunities we are pursuing.”
The company also attributed its results to a second consecutive quarter of softness in agricultural demand for GPS products, saying that its GPS business has become seasonal due to the precision agriculture market, where the third quarter of each year is the slowest and the first quarter is the strongest.
“We are continuing to see the same negative impact from regionalized drought and certain macro conditions on our international and North American product sales,” said Rick Heiniger, president of CSI’s Hemisphere GPS division. “However, as we move into the stronger selling season for agricultural and certain other GPS products, we are focused on integrating new technology into our product lines that will add value, increase sales and build on our very strong market position.”
In addition, CSI said that as a result of its purchased inventory from its acquisition of the Outback business from RHS Inc., a required inventory adjustment decreased margins in 2005.
“While the third quarter is below our expectations, we believe it is a temporary anomaly,” said Verhoeff. “The fourth quarter will show significant improvement, and we expect to return to profitability in the first quarter of 2006-maintaining CSI’s long-term track record of strong growth. Despite the third-quarter loss, we still maintain a healthy balance sheet.”
