March Networks Announces Financial Results for Third Quarter and First Nine Months and Revised Guidance for Fiscal 2008

OTTAWA , Feb. 27 /PRNewswire-FirstCall/ - March Networks(TM) (TSX:MN; AIM:MNW), a leading provider of innovative video and data applications used for security surveillance, monitoring, analysis and business optimization, today announced financial...


OTTAWA , Feb. 27 /PRNewswire-FirstCall/ - March Networks(TM) (TSX:MN; AIM:MNW), a leading provider of innovative video and data applications used for security surveillance, monitoring, analysis and business optimization, today announced financial results for the third quarter and nine months of fiscal 2008 ended January 31, 2008 . All figures in Canadian dollars and in accordance with Canadian GAAP unless otherwise specified.

The Company recorded revenue of $21.1 million in the third quarter of fiscal 2008 representing an increase of 13% as compared with revenue of $18.7 million in the third quarter of fiscal 2007 and a decline of 24% from the second quarter of fiscal 2008. Revenue of $73.4 million in the first nine months of fiscal 2008 represented an increase of 8% as compared to the first nine months of fiscal 2007.

The Company incurred a loss from continuing operations before income taxes in the third quarter of fiscal 2008 of $2.9 million as compared to earnings from continuing operations before income taxes of $1.9 million in the third quarter of fiscal 2007 and a loss of $872,000 in the second quarter of fiscal 2008. Loss from continuing operations before income taxes in the first nine months of fiscal 2008 was $2.9 million as compared to earnings of $9.4 million in the first nine months of fiscal 2007. Earnings from continuing operations before income taxes in the first nine months of fiscal 2008 reflected a one time $2.4 million charge related to a retrofit program which the Company initiated to proactively address design issues related to the Company's installed base of transit products. Earnings from continuing operations before income taxes in the first nine months of fiscal 2007 were negatively impacted by a $2.3 million lawsuit settlement.

The Company incurred a net loss from continuing operations in the third quarter of fiscal 2008 of $3.1 million or $0.18 per diluted share as compared to net earnings of $1.0 million or $0.06 per diluted share in the third quarter of fiscal 2007 and a net loss of $666,000 or $0.04 per share in the second quarter of fiscal 2008. The Company's net loss from continuing operations of $3.4 million or $0.20 per diluted share in the first nine months of fiscal 2008 compares to earnings of $5.3 million or $0.29 per share in the first nine months of fiscal 2007.

"I am pleased with the continued diversification of revenue outside our largest customer. We have aggressively invested in R&D and look forward to the release of our next generation IP products and growing our European business with the acquisition of Cieffe", said Peter Strom , President and CEO, March Networks.

"The Company continued to grow and diversify its customer base in the seasonally slow third quarter and will continue to evaluate strategic investment opportunities to complement organic growth. The costs of developing a new product portfolio are significantly impacting the Company's profitability however these costs are expected to decline as these products are introduced over the next four to six months", said Ken Taylor , CFO of March Networks.

Business Outlook

March Networks maintains its focus on long-term growth objectives and will continue to provide only full year guidance. The Company is maintaining its annual revenue guidance but revising its earnings guidance from that which was last published in the Company's second quarter results released on November 28, 2007 . The Company is revising its earnings guidance to reflect a lower gross margin and higher operating expenses than were previously anticipated. The Company's gross margin is expected to be negatively impacted by a higher anticipated mix of low margin Transportation revenue and the lower expected value of the US dollar relative to the Canadian dollar. Operating expenses are expected to be higher than previously anticipated primarily as a result of cost overruns on product development.

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