Ness Technologies Ltd. (Nasdaq: NSTC; TASE: NSTC) made a $55 million write-off for goodwill in its financial report for the second quarter of 2011, probably the IT integrator and services company's last report before the closing of its sale to Citi Venture Capital International for $307 million ($7.75 per share).
Ness posted $141.3 million revenue for the second quarter, 1% more than the $139.7 million revenue for the corresponding quarter of 2010. GAAP-based net loss from continuing operations was $52.3 million ($1.37 per share), compared with a net profit from continuing operations of $888,000 for the corresponding quarter, and total net loss was $54.7 million.
Non-GAAP net profit from continuing operations rose 32% to $4.9 million ($0.13 per share) for the second quarter. Cash flow from operations was $15.6 million for the second quarter, and the company had $45.6 million in cash and cash equivalents at the end of June.
"Globes": How did you accumulate such a large write-off?
Ness CFO Ofer Segev: "To tell the truth, some of the prices we paid for our acquisitions were from another world."
Most of the write-off was on Ness's IT integration business on which it reported an operating loss of $48 million on $110 million in sales. This was the sector where the company made most of its acquisitions. Two of the company's 20 acquisitions were large deals in Eastern Europe: Czech firm Logos for $68 million in cash in 2008 and Hungary's FMC Consulting and Informatics Ltd. for €30 million in 2007. These and other acquisitions failed to justify their price tags in the new world after the 2008 financial crisis.
Ness reiterated its full-year revenue guidance of non-GAAP earnings per share of $0.57-0.63 on $595-605 million. The guidance is in line with analysts' forecasts.
Ness' share price rose 0.3% in early trading on Nasdaq to $7.66. giving a market cap of $292 million, after rising 0.7% on the TASE to NIS 26.18.
Published by Globes [online], Israel business news - www.globes-online.com - on July 27, 2011
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