In the face of deep second-quarter losses, Cysive is placing bets on an ongoing transformation to a product services company.
Nelson Carbonell Jr., president and CEO of the Reston, Va.-based e-services company, told investors during an earnings conference call Thursday morning that continued market softness has dramatically reduced the company's visibility and lowered demand for traditional services offering.
"We have seen the slowdown spread to sectors beyond high tech, financial services and start-ups, which were already weak," Carbonell said. "It remains difficult to predict where revenue will be, even in the short term, and there are few signs of any improvement in the environment."
For the second quarter ended June 30, Cysive reported a loss, before charges, of $2.3 million or 8 cents per share, on sales of $5.1 million. The earnings beat Wall Streets estimates of a loss of 18 cents per share.
The quarter's earnings, however, pale in comparison to the same quarter last year, when the company reported income of $2.8 million, or 7 cents per share, on sales of $15.2 million.
The biggest hit during the quarter was the decision to halt projects by the company's largest client, a transportation and logistics company accounting for nearly 50 percent of Cysive's revenue.
Cysive's transition to a product services company, which began in December, is expected to culminate with the a new product launch near the end of this quarter.
The new solution set is targeted at Global 200 companies and is based on building out the elements of a platform that complement existing Web technologies such as BEA and Web Methods, Carbonell said.
"The idea is to allow customers to build a single application that communicates over multiple channels: over the Web, wireless and voice-activated," Carbonell said. "One key technology, Follow Me, is a session management strategy that allows you to carry a single transaction across multiple devices as you go," he said.
Response has been positive, Carbonell said. The new focus will shift the business mix over time from independent services revenue to more and more sales of services in conjunction with software. Sales will be direct initially but Carbonell said he expects over time to move to a more channel-based sales strategy.
Cysive did not provide guidance for the third quarter, but estimated exiting the fourth quarter with between $140 million to $150 million in cash.
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