Trintech shares at new lows and poor results expected

Shares in security software group Trintech plunged to record lows on the Neuer Markt and Nasdaq yesterday after the group sounded its third revenue warning in six months. On the Neuer Markt in Frankfurt, the shares fell six cents to €0.62 after falling as low as €0.52 in earlier trading while on the Nasdaq the ADR's fell 14 US cents to 51US cents.

This compares with Trintech's all-time high of €75.25 at the height of the dotcom boom in early 2000 and a flotation price of €5.50 in September 1999. At one stage, Trintech had a market capitalisation of €4.6 billion; at yesterday's price, the company is worth just €36 million.

In a preliminary statement on its first quarter results - the full results will not be released until May 29th - Trintech said revenue in the first quarter would be between $9.5 million (€10.46 million) and $10 million, a fall of 35 per cent on the previous quarter. Even those fourth-quarter figures were 11 per cent down on the previous quarter.

The loss for the first quarter is expected to be in the $4-$5 million range, almost double the previous forecast. The deterioration in sales has meant that Trintech has had to take a $1 million charge in the first quarter to cover the loss in value of its software inventories in the three-month period.

While Trintech chairman and chief executive Mr Cyril McGuire was putting a brave face on the latest revenue warning from the software group, some analysts were scathing about the performance of the company.

ABN-Amro's Ms Jemma Houlihan said bluntly in a note: "There is no sign that the management is anywhere near stabilising the business and takeover predators are steering well clear". Even at its latest low, Ms Houlihan said Trintech shares were not cheap "for a company losing $4 million a quarter".

In his statement, Mr McGuire said Trintech management "is taking the necessary actions to place the company on a solid foundation to improve shareholder value". He added: "We have a clear strategy and development plan to optimise and improve our business performance to transition the company through this difficult period and back to profitability."

The market, however, is clearly not convinced judging by the sharp sell-off in Trintech shares in Frankfurt and New York.

In a separate development, Trintech has moved to prevent its shares from being delisted from Nasdaq by consolidating its ADRs on a one-for-four basis. Because Trintech shares have been trading under $1 for the past four weeks, the company ran the risk of having the ADRs delisted. The consolidation or "reverse split" will quadruple the unit value of each ADR and remove the threat of delisting.