Transnet earnings down due to y2k

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Story Filed: Friday, February 04, 2000 1:50 PM EST

BRANCHBURG, N.J., Feb 4, 2000 (BUSINESS WIRE) -- TransNet Corp. (OTC BB:TRNT) today announced that primarily due to Y2K-related deferrals of new network service projects by certain of its major corporate customers, and the decline in margins associated with the resulting temporary reduction in employee utilization, the company expects to report a net loss in the range of $0.04 to $0.06 per share on revenue of approximately $10.5 million for the second quarter of fiscal 2000 ended Dec. 31, 1999.

For the quarter ended Dec. 31, 1998, TransNet reported net earnings of $0.06 per diluted share on revenue of approximately $11.0 million. The company expects to report final second quarter results in about a week.

"Y2K-related postponements of software implementation and system upgrade projects affected virtually everyone in our industry in the last couple of months of 1999, and TransNet was no exception," said Steven J. Wilk, president.

"However, with Y2K issues now put to rest, the outlook for our business is excellent. We already are seeing a marked increase in demand for technical support projects from our large corporate customers. In addition, we are increasingly excited by our growth opportunities in the burgeoning markets to Internet-enable public schools in New Jersey and New York and to provide corporate clients with IP telephony solutions that reduce the cost of doing business.

"We expect to at least double these sectors of our business during the next 12 months. We are confident that TransNet will rebound quickly from this temporary setback and return to profitability," Wilk said.

Wilk noted that TransNet's book value as of Dec. 31, 1999 was approximately $2.66 per share, including approximately $1.26 per share in cash. He said that the company repurchased approximately 73,500 shares of its common stock during the December quarter, and a total of 357,500 shares since January 1999 under its current 750,000 share repurchase authorization.

"Our strategy is to expand our network service and support operations for large corporate customers and the education market at the same time that we dramatically reduce the contribution of hardware in our total revenue mix. With the rapid increase in service revenue we have reported for the past few quarters, and the continued growth we expect in the future, it is evident that this strategy is working," Wilk added.

About TransNet TransNet is a leading sales and support organization for personal computers, peripherals and networks, and provides sophisticated system integration and repair/maintenance services and user training. Its clients include Fortune 100 organizations, primarily in the pharmaceutical, oil and gas, finance and communications industries, as well as educational and governmental institutions.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this news release that are forward-looking statements are based on current management expectations that involve risks and uncertainties. Potential risks and uncertainties include, without limitation: the impact of economic conditions generally and in the industry for microcomputer products and services; dependence on key vendors; continued competitive and pricing pressures in the industry; product supply shortages; open-sourcing of products of vendors; rapid product improvement and technological change, short product life cycles and resulting obsolescence risks; legal proceedings; capital and financing availability; and other risks set forth in the company's filings with the Securities and Exchange Commission.

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