Wi-LAN Talks Up Recovery
The Canadian equipment supplier has experienced a painful twelve months, culminating in a C$2.448 million (US$2.036 million) net loss for the first quarter of 2005, falling from a net loss of C$0.5 million ($0.4 million) in the 2004 first quarter (see Wi-LAN Sees Revenue Fall, Wi-LAN Posts Revenue Fall, and Wi-LAN Misses Targets ).
In light of this performance, the vendor’s management board last month replaced CEO Dr. Sayed-Amr (Sisso) El-Hamamsy with Bill Dunbar, previously president and CEO of Northwestel Inc. (see Wi-LAN Swaps CEO). Furthermore, earlier this week Wi-LAN announced that chairman and co-founder, Dr Hatim Zaghloul, has resigned his position (see Wi-LAN Chairman Resigns).
A targeted launch date of January 2005 for its 802.16 kit -- dubbed Libra MX -- has also now been delayed until at least the second quarter of this year (see Wi-LAN Unveils Pre-WiMax Kit).
Such developments have seen Wi-LAN’s share price crash over the last twelve months, plummeting from over C$5 ($4.2) a share in January 2004 to C$0.99 ($0.82) a share at close of trading yesterday.
Speaking on an analyst conference call this week, company management has been eager to allay fears surrounding its future health. “We intend to continue to be a serious player in the broadband wireless, and more specifically, the WiMax market,” comments CEO Bill Dunbar.
So how does Wi-LAN expect to dig itself out of a rather large hole?
Dunbar made vague references to a strategy of focusing “sales and marketing resources on specific geographic areas where we believe we have a competitive advantage,” as well as an intention to continue its quest to hold patent rights over rivals such as Cisco Systems Inc. (Nasdaq: CSCO) and Redline Communications Inc. (see Wi-LAN Acquires 802.16 Patent Portfolio, Wi-Lan Steps Up Patent Offensive, Wi-LAN's Patent Ensemble , Wi-LAN Settles With Redline, and Wi-LAN Takes On WiFi).
“Our recovery plan is still a work in progress,” admits Dunbar. "We realise that cash is vital to our success, and we are working hard to grow sales, reduce costs of our products, reduce our operating expenses, and to sell non-core assets to ensure we have adequate cash reserves."
On a more detailed note, the company aims to sell its head office building in Calgary. “We intend to remain as a tenant,”says Keith Bittner, acting CFO. “This will further reduce our overall operating costs. If and when we announce a sale, any proceeds will first be used to pay off the mortgage, and we anticipate there will be additional cash resources left to add to the cash on our balance sheet.”
Management declines to forecast when the company will become cashflow positive, but it appears that Wi-LAN’s financial woes show little sign of abating any time soon. “For this quarter we have not seen large orders like the two large pieces of business we closed in the first quarter,” reveals Chris Beadle, VP of global sales. “We have a healthy funnel and are continuing with our run rate, building it up month over month and at the same time trying to focus on those large opportunities that take us to the next level. We haven’t closed anything that would be material enough to make a press release, but we do have a number of opportunities.”
— Justin Springham, Senior Editor, Europe, Unstrung