Cost-cutting helped reduce first quarter operating losses at Datalex to $4.2 million (€4.7 million) but revenue at $5.6 million was just 3 per cent up on the preceding quarter.

The first-quarter loss was down from the previous first-quarter loss of $13.2 million and a loss of $5.9 million for the final quarter of 2001. But revenue for the three months to end March was less than half that of the first quarter last year and up just 3 per cent on the preceding quarter.

Stating the remainder of the year would be "challenging", chief executive Mr Neil Beck said the first-quarter outcome was in line with the Datalex business plan under which the company had restructured its operations to reduce costs. At the end of March it had an accumulated deficit of $175 million and net cash of $46.3 million. News yesterday that competitor TRX had signed a contract with BAE Systems signalled strong competition for new business and new customers. But Mr Beck said he expected to announce a number of new contracts and new customers in coming weeks.

The supplier of travel reservations software has seen some pick-up in activity in the travel sector and is confident it will be able to capitalise on the improving market conditions, he commented. In the current quarter revenue would be "slightly up" on the first quarter while he expected an increase of about $1.5 million in quarter three followed by a rise of about $1 million in the fourth quarter.

"We have tangible business coming in which will be reflected in the quarter-three and quarter- four results," he said. Declining to set a breakeven timescale, Mr Beck said there were "too many variables". Datalex was focused on increasing revenue and drastically reducing cash-burn rate which would be cut to $5 million this year from $28 million in 2001, he added.

With its share price unchanged yesterday from its 2002 low of 28 cents, the Datalex market capitalisation in Dublin is now just about €18.5 million, a dramatic fall on its October 2000 flotation share price of €7.25 which gave a market capitalisation of €497 million. As part of its cost-cutting the company is no longer quoted on Nasdaq. Broker to the company Goodbody is forecasting full year revenue of $27.1 million with the rate of operating losses trending down over the year to give a full year loss of $13.4 million. Revenue has now stabilised and the company has to look for revenue growth off its lower cost base, according to analyst Mr Gerry Hennigan.