Financial challenges continue for Smart Technologies

OBJ Staff
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Corporate restructuring and the launch of new technologies has put a strain on Smart Technologies’ (TSX:SMA) pocketbook, the Calgary-based smartboard maker announced in its quarterly results on Thursday.

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Smart’s revenues decreased by 25 per cent in its third quarter of fiscal 2013, down to $138.9 million from $185.1 million in the same period the year previous.

The company recorded a net loss of $50.9 million, a significant drop from a net income of $10.7 million last year.

“During the third quarter, we started to refocus the company by restructuring Smart to make it more customer centric, improve speed to market for new technologies and reduce costs in anticipation of ongoing challenges in our core markets,” stated president and CEO Neil Gaydon in a company release.

This quarter included a $34.2 million goodwill impairment charge, a $2 million foreign exchange loss and $15.1 million in costs related to corporate restructuring announced in December. That included the company laying off 25 per cent of its workforce for cost savings of about $40 million. It’s unclear how many of those positions were at its Kanata office.

The strategy will be fully implemented by March 31, according to the company.

Revenue declined by 18 per cent in North America; 26 per cent in Europe, the Middle East and Africa; and 56 per cent in the rest of the world.

Smart’s gross margin remained relatively steady at 42 per cent, compared to 43 per cent for the same period last year. The gross margin is measured by taking the company’s total sales revenue minus the cost of goods sold, divided by the total sales revenue. The slight shift was due to factors including an increase in its warranty provision for its projectors, the company stated.

Cash operating expenses decreased by 10 per cent, from $54.6 million in the third quarter of fiscal 2012, to $49.4 at the end of the quarter ended Dec. 31 2012. Smart has cash and cash equivalents of $145.9 million, with $289 million of debt outstanding.

The company has recently announced new products including a collaborative learning centre and a web-based version of its Notebook learning software.

“With a more efficient and focused organization that is in alignment with our target markets in education and enterprise, we now have a structure that will support the development of our strategy and provide the right cost base,” Mr. Gaydon stated.

Last year, Smart’s CEO and executive chair – both co-founders of the company – resigned from their positions.

In 2011, Smart laid off two-thirds of its Kanata workforce of 300 people as all digital whiteboard assembly shifted to contract manufacturers.

Organizations: Smart Technologies

Geographic location: Kanata, North America, Europe Middle East Africa

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