Iona on track to return to profit

Iona Technologies is on track to move back into profit in the current quarter after cutting losses sharply in the final three months of last year.

Results released by the software firm yesterday show that the net losses fell from $25.4 million in the third-quarter to $5 million in the last three months of 2003.

Losses in the final quarter of the previous year stood at $308 million.

Revenues came in at $23.4 million, down from $30.9 million in the same quarter of 2002, but comfortably ahead of consensus forecasts of $20 million.

Iona chief executive Dr Chris Horn, who moved back into the position in the middle of last year, said he was "thrilled" with the company's continued progress in the fourth quarter.

Dr Horn pointed out that the company has now broken even at the operational level and said he expected to generate a slight profit in the current quarter.

Iona forecasts revenues of $16-$18 million for the first quarter of 2004.

Dr Horn said the start of the year had historically been a slow sales period for the company.

Merrion Stockbrokers analyst Mr Rory Gillen suggested that while the fourth-quarter revenues were good, Iona may need to do better than its own forecasts if its current share price was to be justified.

Shares in the company have doubled since the start of October as confidence continues to grow in the technology recovery. The stock continued to race ahead on the Irish market yesterday, closing 40 cents higher at €6.

The fourth-quarter results included a $6.6 million restructuring charge relating to staff redundancy payments and the writedown of leases on vacated office space.

Dr Horn said the company had no plans for further restructuring as long as customer interest in its products continued to grow.

He pointed in particular to solid demand from Asian customers and a pick-up in spending within the financial and telecommunications sectors.

Iona completed four deals worth about $1 million in the quarter, as well as one multimillion deal.

Dr Horn said it was "a good 90 days".

The company closed the year with cash of $57 million, noting that this cushion, when coupled with a reduced cost base, would position it for "sustainable performance".