Plasmon 1H07 narrows loss as continues transition to archive solution specialist
Plasmon plc reported that its operating losses narrowed to £4.8m in the the six months ended 30 September from £5.7m in 1H06, while sales slid by 20% to £14.8m as older product lines were impacted by cyclical declines and a weak US IT market since the summer.
On a constant currency basis, sales declined by 14%.
Plasmon said it was continuing its transition from a specialised seller of optical hardware to an archive solution provider, meeting key enterprise customer priorities for archiving integrity, longevity and legal compliance.
It said that the environmental friendliness of its solutions (90-95% lower energy requirements than rival hard disk systems) is also increasingly attracting business and public sector customers.
It said that despite sales weakness experienced since the summer, the business continues to develop in line with the Board's expectations for the transition underway and the goal of reaching cash flow breakeven in the 4th quarter.
Chairman Rod Powell said "The past six months have seen a successful restructuring of our cost and manufacturing base, and a successful launch of our UDO2 and Archive Appliance solutions.
"Steven Murphy (pictured) is a proven CEO in the Storage sector, and his experience in Enterprise Solutions sales will accelerate the promising growth our next generation products are demonstrating."
Mr Murphy, who was appointed in mid November and who is based in the US, said: "The Enterprise archiving market wants something better than magnetic tapes or power-hungry RAID server farms. Plasmon has an unchallenged leadership position with Archive Appliance; our optical solution offers low cost of ownership, fast retrieval and a physically permanent storage media.
"In the second half, a direct sales focus on the corporate, financial and government sectors, where these attributes are critical, will build a major opportunity for future sales growth."
The Cambridge-based company said it will continue to invest in developing the enterprise-class indirect solutions channel and in programmes to stimulate end-customer demand in the enterprise archive market. The process of recruiting this new tier of resellers has progressed ahead of plan; in 1H07, 16 of its 22 priority targets were signed up to formal contracts and had staff qualify as Plasmon-certified archive consultants.
Outlook
Mr Powell said that despite the ongoing softness in US IT capital spend and reduced revenue visibility, the Board believes Plasmon can still meet the cash break even goal
in the 4th quarter as a result of the strengthening of senior leadership; the demand for its new Archive Solutions to meet the compliance and environmental priorities of enterprise customers; the increasing maturity of its new channel partners; and continued cost control.
The company is still trading close to 52 week lows at around 17.25p, which values it at almost £21m.
30th November 2007
