OTTAWA, Nov. 8, 2011 /CNW/ - March Networks® (TSX: MN), a global provider of intelligent IP video solutions,
announced today a preliminary revenue estimate for the second quarter
ended October 31, 2011 and revised financial expectations for fiscal
2012. All figures are in US dollars and in accordance with IFRS unless
The Company expects revenue for the second quarter of fiscal 2012 to be
approximately $22 million, which compares to $27.5 million in the
second quarter of fiscal 2011 and $22.4 million in the first quarter of
fiscal year 2012. The Company's second quarter fiscal 2012 results are
still subject to review by its external auditors and the Company
expects to release its full financial results for its second quarter on
December 8, 2011.
"The Company believes that delays in order intake and revenue declines
in the first half of fiscal 2012 are attributable to normal quarterly
revenue volatility and the negative impact of the ongoing global
macro-economic situation, particularly in the banking sector," said
Peter Strom, President and CEO of March Networks. "We expect this
situation to improve in the second half of the year based on our
growing pipeline of activity and improved visibility with some of our
Ken Taylor, CFO of March Networks, commented, "The Company anticipates
revenue growth in the second half of fiscal 2012 as supported by
today's announcement of orders received from a large retail customer
that are expected to generate approximately $14 million in revenue in
the Company's third quarter ending January 31, 2012. However, the
Company may not achieve revenue growth in fiscal 2012 relative to
fiscal 2011 due to the lower than expected revenue and order intake in
the first six months of the fiscal year. The Company no longer
anticipates generating net earnings in fiscal 2012 due to lower
expectations for revenue and gross margin as a percentage of revenue."
Peter Strom added, "As we continue to explore strategic alternatives for
March Networks, we remain focused on operating our business and remain
committed to returning the Company to profitability."
Financial Results Call Scheduled for December 9, 2011
March Networks will release its second quarter fiscal year 2012
financial results on Thursday, December 8, 2011 following the market
close. The Company will discuss the results on a conference call and
webcast on Friday, December 9, 2011 at 8:30 a.m. EST (1:30 p.m. UTC).
Further details to be provided on how to access the call and webcast.
Update on Strategic Alternative Review Process
As disclosed previously, the Board of Directors of the Company
established a Special Committee to review strategic alternatives for
the Company. The Special Committee, together with its financial and
legal advisors, continues to explore potential strategic alternatives
for the Company with the goal of enhancing value for the Company's
shareholders. The Company does not intend to disclose developments with
respect to the progress of its strategic alternative review process
until such time as the Board of Directors approves or completes a
transaction or otherwise determines that further disclosure is
Certain statements included in this release constitute forward-looking
statements, including those identified by the expressions "anticipate",
"believe", "plan", "estimate", "expect", "intend" and similar
expressions to the extent they relate to the Company or its management.
The forward-looking statements are not historical facts but reflect the
Company's current assumptions and expectations regarding future results
or events. These forward-looking statements are subject to a number of
risks and uncertainties that could cause actual results or events to
differ materially from current assumptions and expectations.
Assumptions made in preparing the forward-looking statements contained
in this release include, but are not limited to, the following:
The addressable market for the Company's products will grow by at least
The Company will develop and deliver new products on time in order to
satisfy the demands of current and potential customers.
The Company's new products will address the needs of new and existing
customers and contribute to near term profitability.
The Company will successfully reduce product costs to improve the
Company's gross margin and/or avoid any margin erosion associated with
competitive pricing pressure.
The average exchange rates for Canadian dollars and Euros to US dollars
will be US$1.00=CDN$1.00 and Euro 1=US$1.40.
The Company will have adequate component supply to meet customer demand.
Factors that could cause actual results to differ materially from
expected results include, but are not limited to, the following:
The Company is conducting a review of strategic alternatives that could
disrupt its business and affect the Company's financial condition,
operating results, share price and/ or ability to attract and retain
The Company's quarterly revenue is generally dependent upon conversion
of opportunities in the sales pipeline during the quarter and, as a
result, revenue and operating results can be difficult to predict and
can fluctuate substantially. The Company's success in realizing
customer opportunities may be negatively impacted by depressed economic
conditions, changes in sales cycles, and/or weaker than expected
success versus competitors.
Longer than expected lead times from component suppliers could result in
production delays resulting in delayed or lost revenue and /or reduced
profits. There is currently a global shortage of hard drives as a
result of recent flooding in Thailand, which is the world's second
largest exporter of hard drives. Failure to secure adequate hard drive
supply and/or an increased cost in securing adequate supply may have a
material negative effect on the Company's revenue and profitability.
The Company's gross margin and operating results may be adversely
affected by pricing models required to compete successfully, lower than
expected revenue mix of software and high margin hardware products,
and/or a failure by the Company to achieve its product cost targets.
Product issues that result in increased costs to the Company and/or lost
Delays in product development programs for new products and new product
features which lead to cost overruns and /or missed customer
The Company plans to become increasingly dependent upon third parties
for product design and supply. Higher than expected costs and delayed
or lost revenue may result if these activities are not transitioned and
Shifts in value of the US dollar relative to the Canadian dollar may
cause the Company's operating costs to fluctuate significantly.
Additional risks are discussed under "Risk Factors" in the Company's
Annual Information Form available online at www.sedar.com.
About March Networks
March Networks® (TSX:MN) is a leading provider of intelligent IP video solutions. For
more than a decade, the company has helped some of the world's largest
commercial and government organizations transition from traditional
CCTV to advanced surveillance technologies used for security, loss
prevention, risk mitigation and operational efficiency. Its highly
scalable and easy to use Command™ video management platform incorporates a web-based client interface to
enable rapid system deployment and complete system control. It is
complemented by the company's portfolio of high-definition IP cameras,
encoders, video analytics and hybrid recorders, as well as outstanding
professional and managed services. March Networks systems are delivered
through an extensive distribution and partner network in more than 50
countries. For more information, please visit www.marchnetworks.com.
*MARCH NETWORKS, March Networks Command and the MARCH NETWORKS logo are
trademarks of March Networks Corporation. All other trademarks are the
property of their respective owners.
SOURCE MARCH NETWORKS CORPORATION
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