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S1 retrenches as sales cycle lengthens

07 April 2003  |  2802 views  |  0 graph

US-based banking systems vendor S1 is to shut down its UK data centre and undergo further retrenchment in its Asian operations after marking down revenue expectations for the coming year due to continued market weaknesses.

S1 says that restructuring costs will push the company into the red for the first quarter of 2003, with an expected loss per share of $0.11 to $0.13 against an upper level forecast profit of $0.01 per share. S1's first quarter 2003 revenue is expected to be $58 million to $60 million, in line with previous guidance.

S1 CEO James Ellerson says that the economic environment is continuing to extend sales and implementation cycles. "Our principal focus for 2003 centres on building a long-term stable Enterprise customer base," he says. "This focus in combination with the current difficult market conditions leads us to re-evaluate our revenue expectations for the remainder of the 2003 calendar year."

S1 is to incur total costs of $4.8 million in the first half as it consolidates its UK data centre operations with its global hosting centre in Atlanta. The company has yet to indicate how many jobs will be lost in the pull-out.

Losses on vacant properties and a forced reduction in the vendor's Asian operations take the total Q1 charge sheet to $7.1 million.

Set against this, S1 has amended a data centre hosting contract with a major European bank, in an effort to shorten the term over which revenue will be recognised. As a result, payments totalling $6.3 million which would previously have been recognised ratably throughout 2003 and 2004 will instead be brought forward to the first and second quarters of 2003.

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