Iona fails in bid to
return to profit

1 Jul 2005

Failure by Nasdaq-listed Irish software player Iona Technologies to close three key technology deals in the US will have an adverse impact on plans by the company to return to profitability later this month.

Two weeks ago – on the occasion of chief finance officer Dan Demner announcing his departure from the company – Iona said it expected total revenues for the second quarter to be in the range of US$16m to US$17, which it said would leave a tight margin for the company to return to profit.

However, this afternoon the company corrected this guidance, saying instead that 2005 revenue will instead be in the range of US$13.6m to US$14.1m and that it expects to report a net loss for the second quarter in the range of US$0.06 to US$0.08 per share.

In a conference call, Iona chief executive Peter Zotto revealed the company’s failure to close three key deals will impact its second-quarter performance. He said two of the deals were with US government bodies and the third was with a financial services firm.

Zotto said the first two deals failed due to internal customer process issues and for the final deal there were price issues that impacted the closing of the deal. “I expect the first two deals to close in the upcoming quarters. These are existing Iona corporate customers.”

Zotto said Iona currently has a cash balance of US$50m and the company’s departure in the direction of enterprise service bus (ESB) technology was bearing fruit insofar as its Artix product line represents 13pc of revenue. He reaffirmed his belief Artix would represent 20pc of Iona’s revenues by the end of the year.

Zotto added 11 Artix-related deals were closed during the second quarter but elaborated that none of these deals exceeded the US$1m mark, with the average deal valued at between US$150k and US$170k. “We are happy with the momentum of Artix in the market place,” he said.

By John Kennedy