Contracts with Manpower and Microsoft were "endorsements" of Smartforce's move to Internet training, chairman Mr Bill McCabe said yesterday. He said there was not a strong understanding about what the company was doing when it announced a change of strategy, and of name from CBT, last month, resulting in a slump in the share price from $27.25 to $14.56.

Wall Street had been "violently negative" but, with the recent rise in the share price, the recovery had begun, he said. The "market is beginning to understand our strategy".

Manpower, the international employee services company, is to apply Smartforce's e-learning solution to the Manpower Global Learning Centre. The deal, said Mr McCabe, was valued at $7 million (€6.9 million), and Manpower would use Smartforce's courses to teach technical, business and interpersonal skills to more than 150,000 employees.

Smartforce has also been chosen by Microsoft to work with its certified professionals scheme. This had led to hundreds of thousands of visits to its site, Mr McCabe said. At this stage, he added, it was hard to quantify the financial benefits.

Smartforce says its e-learning is a faster and more interactive way of learning. Its development is to cost $45 million - $30 million will go on infrastructure and $15 million on marketing and the establishment of its brand name. Already 10,000 are coming on to its site per day, according to Mr McCabe.

Asked about the potential downside, he said the strategy was "not without a challenge". Its success would depend on technical development and marketing but he stressed the company had always delivered and expressed confidence that the new strategy would prove fruitful.

However, as it is providing access to an Internet environment rather than selling software licences, revenue under the new agreements would be recognised over the term of the agreements rather than annually in advance. Thus, revenue would be substantially reduced in 2000. This will lead to a loss this year instead of the anticipated profit of some $36 million.

However, Mr McCabe reaffirmed that profits should start to flow through in the last quarter of 2000. And, if the strategy works, the real benefits are expected to flow through thereafter.