March Networks to lose $7 million before taxes

Video security firm March Networks has warned that preliminary figures show it will suffer a higher than expected pre-tax loss of $7 million for fiscal 2008, due to lower than expected fourth quarter revenue and higher than expected costs.

The Ottawa company said Tuesday that in the fourth quarter that ended April 30 it pulled in $21 million, bringing revenue for the year to $94 million. That was at the bottom of its anticipated revenue range of between $94 million and $013 million. Detailed final figures will be released June 12.

Tom Wilenius, the company’s vice-president of corporate development, said the company wouldn’t comment until then on the details of the unexpected costs for the fourth quarter. However, earlier in the year it had to absorb a one-time $2.4 million charge for having to retrofit systems on transportation fleets and from settling a $2.3 million lawsuit.

As a result losses from continuing operations before income taxes for the first nine months of fiscal 2008 was $2.9 million, compared to earnings of $9.4 million in the first nine months of fiscal 2007 It also just closed a $12 million cash and stock deal to buy Italian video surveillance vendor, Cieffe S.p.A. of Milan. Wilenius said that greatly expands March’s product lines.

March makes IP-based digital video recording and surveillance systems, targeting financial, retail and transportation sectors. Wilenius wouldn’t comment on the source of the fourth quarter costs, but he did point out that the fiscal year did include “accelerated R&D spend.”

“Obviously we’re not satisfied if profitability [for fiscal 2008]is outside the guidance range,” he said, “but revenue was within the guidance set.”

“It’s been a positive year,” he said. “We greatly diversified the business, and there was strong growth in the number of customers outside our largest customer [Wal-Mart], which is an object we set at the beginning of the year.” Another highlight of the year was the April launch of the VideoSphere video management system. For the coming year the goal is to continue to diversify the number and size of customers, he said. March will also diversify into more countries.

The company’s stock, which had been in the $14 range in September, was down 25 cents on the announcement and was trading Tuesday at $5.50

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