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NCipher slips on Q1 losses

08 June 2006  |  3348 views  |  0 graph 2

Shares in UK encryption technology vendor nCipher slumped in morning trading after the company said disruption caused by SafeNet's aborted takeover offer had hit first quarter sales and could impact full year revenues.

NCipher stock fell 8.30%, or 17.50 pence to 192.50 pence after the firm reported operating losses of £0.6m for the three months to 31 March, compared to profits of £0.2m a year ago. But on a more positive note, nChiper says first quarter revenue rose 32% to £5.1m, compared to £3.9m a year earlier.

IT security company SafeNet abandoned its takeover bid for nCipher after the proposed acquisition was referred to Britain's Competition Commission.

In a statement, nCipher CEO Alex van Someren, blamed the the first quarter loss on distruption caused by the abandoned bid.

He says the aborted offer delayed the firm's plans to complete the integration of its Abridean acquisition. The operating costs associated with Abridean along with significant one-off professional costs associated with the SafeNet offer, have impacted profitability during the quarter. Furthermore, the firm has continued to invest in the business during the quarter to facilitate future growth, which has increased overheads accordingly.

Van Someren also warned that disruption caused by SafeNet's abandoned bid could hit revenues during the rest of the year: "As a result of SafeNet's aborted offer we have noted some disruption to our sales pipeline which may impact revenues during the balance of the year, and we expect to take steps to control the company's overheads accordingly."

nCipher also says that chairman Ossama Hassanein is retiring from the board following his relocation to Silicon Valley.

Chief operating officer and EVP, finance Ian Smith is also resigning from the board and will be succeeded by Kenneth Prenty who joins the vendor as chief financial officer and company secretary.

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