TORONTO-Shares of software developer 724 Solutions Inc. tumbled Wednesday after the company hinted it could lose a key contract with Sprint PCS.
In a press release regarding the company’s second-quarter results, 724 said that while it was still providing technology to Sprint through Hewlett-Packard Co., the carrier “has an ongoing project with another mobile technology vendor that could ultimately result in the replacement of (724’s) access gateway solution.”
Such a move probably wouldn’t occur before November and would cost 724 Solutions as much as $500,000 per month, according to the release. Sprint is 724’s largest customer, representing half the company’s business.
724 Solutions’ total revenue in the second quarter was $4.6 million compared with $5.8 million in the previous quarter and $3 million in the second quarter of the previous year, a 51-percent increase year-over-year. However, net loss for the second quarter was $1.5 million, or 25 cents per share compared with a loss of $466,000 or 8 cents per share in the previous quarter and a loss of $2 million or 34 cents per share in the second quarter of 2004, excluding a $900,000 one-time restructuring reversal.
Investors fled the stock early Wednesday, with shares falling nearly 18 percent to $5.41 on the Toronto Stock Exchange before recovering slightly. But the slide continued Thursday morning as shares further fell 7 percent to $5.01 in mid-day trading.
