CBT, the troubled information technology software firm, has, as expected, recorded a sharp decline in profitability in the last quarter of 1998.
Results released from its base at Redwood City, California, shows a drop in pre-tax profit to $2.6 million (#2.2 million), from $11.1 million (#9.6 million). This occurred despite a marginal (7 per cent) drop in revenue to £44.3 million (#36.5 million). The results are broadly in line with expectations.
"The fourth quarter of 1998 was a satisfactory one for the company", said chairman, Mr Bill McCabe. "There is much left to do to return the company to the path of long-term growth and acceptable profitability, but we have successfully taken the critical first steps".
He noted that the "re-energised" executive management team has been responsible for defining the group's direction for many years and has a strong track record.
"We believe this team is uniquely qualified to chart the company's path as we move forward in 1999 and into the next century. We're also very excited about the addition of Knowledge Well (owned by Mr McCabe and Knowledge Well management and is being acquired by CBT) which we anticipate will open up entire new areas of opportunity for CBT Group".
Mr Gregory Priest, CBT president and CEO, agrees that the results are satisfactory. "We had a challenging third quarter in which we did not meet management's internal revenue expectations. During this time of dislocation, we were able in the fourth quarter to meet internal goals for the quarter by increasing revenue 20 per cent sequentially and by keeping costs under control to enable us to deliver $0.05 in earnings per share."
Forward business is looking good. Orders amount to some £144 million. This, CBT said, is 31 per cent over the £110 million backlog at the end of 1997. Mr Priest said this " makes a strong statement about the underlying strength of our business franchise".
The last quarter of 1998 saw a number of changes at the group following the replacement of its two most senior executives in an effort to regain investor confidence. That confidence evaporated with the shares falling from $60 to $10 in just three weeks because of results well below analysts expectations.
Mr McCabe rejoined the group in an executive capacity but the share subsequently fell to a low of $6.72 before recovery to over $16 and yesterday went ahead again to over $17. A number of CBT shareholders are taking class actions against some of the CBT former and existing directors, over last year's events. These are still pending, but CBT makes no reference to them in its latest results. Mr McCabe was not available for comment.
CBT said "from a sales standpoint" it exceeded its target of $5 million plus contracts in the last quarter. Also it has continued to produce new interactive training titles "at an aggressive rate" with a delivery of 72 new titles. It ended the year with a total of 837 interactive training titles, a 50 per cent crease on the previous year. CBT said it has "taken significant steps with respect to its deployment and management software offerings". In the last quarter, it introduced a new version of CBT Campus, the company's flagship enterprise training system.
