Europe troubles hit Canadian telephony company

Revenues have fallen at a Canadian telephony company, which blames economic trouble in Western Europe – where most of its sales came from –for the drop.

Concord, Ont.-based Aastra Technologies Ltd. said Tuesday that revenue for the three months that ended June 30 was $147.1 million, compared to $174.1 million for the same period last year.

That’s a drop of 15.5 per cent, although excluding the impact of foreign exchange it ended up a 10.9 per cent drop, the company said in a news release.

Revenue for the first six months of the year totalled $294.3 million, compared to $336.8 million for the same period in 2012.

The company’s profit for the quarter decreased to $1.9 million from $6.1 million from the same period a year ago.

“We didn’t anticipate this quarter to be so poor,” chairman and co-CEO Francis Shen told financial analysts in a conference call. “At the beginning of the quarter I wouldn’t have thought we would have come in with these numbers. We were quite impacted by the European crisis. During the French election that month our sales dropped off the cliff, but thankfully after the election things came back. We really have very little visibility [into sales] into the future.”

Traditionally, the company said, the third quarter is the worst period for company sales but sales bounce back in the last quarter. It expects that trend will be the same this year.
Asked what will lead the company back into growth this year, Shen cited cloud-based phone services, plus improvements to its mobile convergence and contact centre offerings. He pointed out that in April the company bought Munich’s Comdasys AG, whose technology links corporate networks to cellphones. It hopes to release a mobile client shortly. But he noted that it was only in June that Aastra released in June version 5.0 of its BluStar MX-1 unified communications system with extensions to do mobile video calls. As for the cloud, he noted that in April Aastra and Level 3 Communications signed a deal to offer hosted IP PBX services to the 350 research, education, government and corporate customers of the high-speed Internet2  network in the U.S.

Aastra sell unified communications and IP telephony solutions including the Intelligate IP PBX, the Aastra 5000 telephony over IP suite and desk phones.

In Europe it faces competition from Siemens Enterprises and Alcatel-Lucent. Kris Thompson, a financial analyst with National Bank Financial, wrote in a note to investors that because those two companies are up for sale Aastra may be facing some “irrational” competitive product pricing.

However, he noted Aastra has a strong cash flow.

The telephony sector should see some buy-outs, he wrote, which should eventually help the company.

Competitors include Ottawa’s Mitel Networks, Cisco Systems Inc. and ShorTel Inc.