Shares in e-learning group SmartForce rose strongly after the company reported third-quarter results well ahead of market forecasts. On the Nasdaq market in New York, the stock closed up $8.31 on $50.31 on the back of heavy demand. In a separate development, SmartForce has signed a contract with online broker E*Trade to provide customised e-learning for more than 2,000 E*Trade customer service associates.
SmartForce also disclosed it had reached its target of having e-learning account for 80 per cent of its business ahead of schedule. A year ago, SmartForce announced plans to transform itself from a computer-based learning company to Internet-based learning, a move it said would result in short-term losses because of the huge investment involved.
Initially, the markets viewed the strategy sceptically and the stock plunged. However, the third-quarter figures appear to vindicate the company's approach. The results were far better than the market had expected, with net losses of six US cents per share compared with the consensus forecast of nine cents. Sales at $45 million (€37.76 million) were 25 per cent ahead of the second quarter and net losses were $3 million. In the nine months to the end of September, sales reached $110.5 million with losses of $20.7 million.
This is a big turnaround from the profits at the end of the third quarter of 1999 but SmartForce's progress towards becoming primarily an e-learning company has been faster than the company itself had expected. Initially, it aimed to have 80 per cent of business coming from e-learning by the end of the year. Chief executive officer Mr Greg Priest said: "In only three quarters since our general commercial release of SmartForce e-learning, we have completed the migration of our business from a computer-based training company to an e-learning solutions company and we did so a quarter earlier than even we had hoped."
In addition, the group had a contract backlog of $290 million at the end of September, $34 million higher than the backlog at the end of June and the highest level in the company's history.
