MARKETS
SkillSoft losses balloon
11-09-2003
by
In its second fiscal quarter, e-learning company SkillSoft posted a net loss of USD53.2 million, about 400 percent greater than its first quarter net loss.
A sizeable portion of this loss, however, was a once-off charge of USD44 million, or USD0.44 per diluted share, for the settlement of its NETg litigation. The figure also includes merger-related R&D costs of USD4.2 million and a USD5 million charge for restructuring activities and the pending restatement of the historical SmartForce financial reports. About USD5.5 million in other charges were racked up for amortisation and depreciation.
On a per share basis, Skillsoft said its net loss amounted to USD0.53 compare to a loss of USD0.13 in the first quarter.
The company's CEO was outwardly upbeat about the results. "Our results this quarter reflect the strong focus on steadying our business model while we continue to emphasise increasing customer retention to historical levels," said Chuck Moran.
SkillSoft last year merged with Irish e-learning company SmartForce, but shortly after the deal was completed the newly formed company admitted to inaccuracies in some of SmartForce's older financial reports. The mistakes have since dogged the company as investors filed lawsuits over the gaffe.
Nevertheless, the firm's most recent figures show that business is improving, with revenue coming in at USD45.1 million for the quarter ending 31 July, a marginal increase on the previous quarter. Compared to the its second fiscal quarter a year ago, revenues were up 193 percent, although last year's numbers exclude the SmartForce side of the business.
Though its woes over SmartForce's problematic books continue, the company no longer will have the NETg lawsuit over its head. On July 21 SkillSoft reached a settlement with NETg (National Education Training Group) and its parent company Thomson Learning to end the five-year long litigation in which NETg alleged that SkillSoft and certain of SkillSoft's executives, who were former employees of NETg, had taken NETg trade secrets. The agreement also settled a patent infringement claim brought by NETg against SkillSoft in 2001.
According to the settlement agreement, SkillSoft paid NETg USD22 million in July 2003 and will pay USD22 million in July 2004. SkillSoft has also agreed not to make certain specific modifications to its IT courses for a limited period of time. In exchange, SkillSoft and the named executives, have been released from any liability based on or arising from the alleged use of any alleged NETg intellectual property.
The company is positive about its future and Moran said it continue to invest in learning assets for the business.
SkillSoft said it expects to post third quarter revenue of USD47 million to USD48 million for the third quarter, and USD51 million to USD53 million for the fourth quarter.
While the company is expecting a net loss of USD0.05 to USD0.06 per share in the third quarter, it is expecting a net profit of USD0.04 to USD0.05 per share in the final 2004 fiscal quarter. The company's full fiscal year forecast was unchanged from earlier predictions, with revenue of USD185 million to USD190 million, and a net loss of USD0.66 to USD0.67 per share.
Skillsoft employs 300 at its Dublin facility, which is responsible for part of the company's EMEA operations.
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