In its financial report published yesterday by IT integrator Ness Technologies Ltd. (Nasdaq: NSTC; TASE: NSTC), which last year restructured into three business segments - software development, systems integration, and software distribution - said that it was closing NessPro, itsoftware distribution segment for Europe and Thailand.
Tel Aviv-based Ness also announced that it has signed an agreement for the sale of its Asia-Pacific system integration and application development operations, which it expects to close during the second quarter.
Business sold and discontinued cost Ness an operating loss of $28 million in 2009, due to the restructuring of the company's European activities. In 2006-07, Ness acquired three companies, one each in Italy, Spain, and Thailand, for its NessPRO unit for a total of $50 million.
"Globes": What happened?
Ness CFO Ofer Segev: "There has been a question mark for several months about whether we would continue or not. Some investors also asked why were still keeping this. We concluded that the sale of software did not fit our services business in Europe."
Ness reported a first quarter loss of $5.4 million on its discontinued operations, most of which was NessPRO's activity in Italy, Spain, and Portugal.
Ness' revenue rose 6% to $133.3 million for the first quarter from $126.3 million for the corresponding quarter of 2009. GAAP-based net profit from continuing operations fell to $698,000 ($0.02 per share) for the first quarter from $2.5 million for the corresponding quarter. Non-GAAP net profit from continuing operations fell 28% to $3.4 million from $4.6 million for the corresponding quarter.
Ness reiterated its full-year guidance for 2010 of $575-585 million revenue and non-GAAP earnings per share of $0.43-0.47 on continuing operations. The company cited the continuing improvement in overall economic outlook, with the exception of Central and Eastern Europe. "The company expects that seasonal variations in its quarterly results will be reduced compared to historical levels, now that its European software distribution operations are not reported within continuing operations."
Ness' share price fell 9.2% on Nasdaq yesterday to $6.33, giving a market cap of $176 million. The share price fell 6.3% by midday on the TASE today to NIS 23.94.
Published by Globes [online], Israel business news - www.globes-online.com - on April 29, 2010
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