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TTI Dips on Results Delay

Light Reading
News Analysis
Light Reading
11/25/2004

OSS vendor TTI Team Telecom International Ltd. (Nasdaq: TTIL) became the latest telecom firm to unsettle its investors when it postponed its third quarter results presentation this week (see TTI Postpones Q3 Results).

The software firm was due to unveil its latest quarterly numbers on Tuesday, but at the last minute put the announcement back by a week to November 30.

Analysts are expecting revenues of $9.5 million and a loss per share of 42 cents.

The market reacted as expected, with TTI's share price falling 6 cents, nearly 3 percent, to $2.06 on Tuesday, and then another 3 cents Wednesday to $2.03, giving the vendor a capitalization of $24.1 million.

That's less than the $25.2 million it had in "cash and liquid investments" on June 30 this year, according to the company's filings.

TTI wouldn't give any reasons for the delay, and also declined to comment on suggestions that the company is trying to raise new funding of up to $20 million from a private placement.

It's not difficult to see why TTI might need a cash injection. The company's revenues have been declining for several years, it hasn't made an annual profit since 2001, and despite cost-cutting measures it is losing money and eating cash each quarter (see TTI Restructures, Cuts Staff and table below).

Table 1: TTI's Quarterly Losses 2003-2004 (in $ millions)

Q2 2004 Q1 2004 Q4 2003 Q3 2003 Q2 2003 Q1 2003
Revenues $9.3M $11.4M $12M $11 $11.5M $11.3M
Net Income ($6.5M) ($5.6M) ($5.8M) ($12.7M) ($5.8M) ($5.8M)
Source: Company data




And the company noted during it's second quarter presentation that its performance in the three months to June 30 "was the result of the ongoing, lackluster demand for OSS and a cost structure designed to support a much higher revenue run-rate."

So what could be behind the delay? The last time the company postponed its quarterly announcement was in February 2003, when it needed more time to assess the loss of a major account (see Hutch 3G Dumps Supplier).

Another reason could be the tricky nature of realizing revenues from software upgrades, something that caused fellow OSS player MetaSolv Software Inc. (Nasdaq: MSLV) to postpone its quarterly announcement recently (see MetaSolv Delays Q3 Numbers).

Or, of course, things might be worse. TTI is currently facing a class action lawsuit, which alleges that TTI has committed accounting fraud (see TTI Faces Class Action Lawsuit).

All in all, it hasn't been a great year for TTI, even though it has announced a number of customer wins (see TTI Claims Oz OSS Deal, TTI Pins Down Carrier Deals, TTI Lands Major OSS Deal, and TTI Wins European GSM Deal). The company has had to shuffle its senior management after its chairman was found guilty of fraud in February (see TTI Telecom Appoints New CEO, TTI Names CEO as Prez, and OSS Chief Convicted of Fraud).

— Ray Le Maistre, International News Editor, Light Reading

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