SR Telecom looks to new markets
SR Telecom looks to new markets
Aiming for operating profit by 2008. Also in talks with wireless giants to boost sales in U.S. market
The Gazette
Published: 7 hours ago
Faced with stock worth 5 cents a share, broadband wireless access vendor SR Telecom Inc. yesterday announced new goals to grow profit margin, revenues and shareholder value by 2008.
After a year he described as "one of the most challenging in our 26-year history," Telecom president and CEO Serge Fortin said Telecom intends to turn an operating profit and improve its margins from 24 per cent on average to 35 per cent by the end of 2008.
To boost revenues from $100 million in fiscal 2007 to $130 million in 2008, SR Telecom will begin charging for the services it now offers free when selling equipment to wireless service providers.
"Make no mistake, we are still in a transition phase," Fortin told shareholders gathered at the company's annual general meeting. "We must be realistic, but optimistic. Optimism is good, and it is warranted here." While Telecom shareholders who bought their stock at the year-low price of 5 cents could share Fortin's optimism, others expressed grave concerns. One longtime shareholder who said he bought for under $6 a share, berated himself for not selling when the stock spiked at $14.80 in 2003.
In May, management had suggested selling the company, restructuring, or seeking creditor protection, since its search for permanent financing was lagging. In July, however, Telecom was able to raise $45 million in new financing.
Despite growing revenues and reporting smaller losses during the first half of the year, the company is still in the red. Telecom is still working to trim costs - its workforce is now at 250 employees, down from 350 in May.
The company, which operates in Latin America and developing countries, is pursuing new markets in India, China and eastern Europe. It's also holding talks with wireless giants Sprint and Clearwire to boost sales in the U.S. market, Fortin said.
Independent analyst Cintia Garza said SR Telecom has many strengths, including a broad customer base and years of industry experience. He said he felt the company would have more opportunities in developing countries than in the U.S.
What they need is to improve margins - fast.
"I'm not going to say they have no chance," Garza said. "But if they don't execute well in the next 12 months, they're dead."
© The Gazette (Montreal) 2007
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