SkillSoft forecasts US$6m losses

10 Mar 2003

E-learning player SkillSoft, which acquired Irish company SmartForce last year, says it is anticipating a net loss of US$6m for its fiscal fourth quarter, ended January this year.

The company included ‘goodwill impairment’ due to a controversial court case over improperly booked revenues at SmartForce along with restructuring charges and merger related costs as contributing to the loss.

Recent legal actions in which SkillSoft became embroiled include at least three US law firms that have filed class action law suits against SmartForce and two of its executives, Greg Priest and William McCabe, on behalf of investors who lost money on shares they acquired between 19 October 1999 and 22 November 2002. The three firms allege that SmartForce’s failure to supply investors with correct financial details over the previous three-year period was fraudulent, insofar as they allege that untrue statements about the company’s finances were made in order to induce the plaintiffs to buy SmartForce shares.

“We are beginning to see the operational benefits of the SkillSoft-SmartForce merger,” says Chuck Moran, president and CEO. “I am also pleased, particularly in this economic environment, to enter the new fiscal year with over 50pc of SkillSoft’s forecasted revenue already booked for the year.”

The company expects revenue for the fourth quarter to meet or exceed the range of US$39.5m to US$40m. In relation to the goodwill impairment charges, the company said in a statement that it “is not yet able to estimate the goodwill impairment charge, but it does expect it to be substantial.”

However, despite the ravages of the court case, the company says that business is still good in the e-learning sector, with customers renewing their contracts and upgrading their annual dollar commitment to the company by 128pc.

Non-cancellable revenue backlog was over US$100m, which is greater than 50pc of the company’s expected revenue for the 2004 fiscal year. The company added that it has a strong balance sheet, with over US$120m in cash and investments, and no debt.

Looking to the end of the fiscal year 2004, SkillSoft is anticipating revenue to be between US$185m and US$195m.

By John Kennedy