BakBone's Ready to Rumble

Q1 revenues up 48%; layoffs helped boost the balance sheet. Next: A switch to US exchange UPDATED: 08/07/01 10am EDT

August 7, 2001

2 Min Read
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BakBone Software Inc. (Toronto: BKB), a maker of storage management software, reported quarterly revenues were up 48 percent compared with the same period last year.

The revenues in question: $1.6 million (see BakBone Reports on Q1).

While revenues are still small, BakBone executives say results announced today signal the company is in a good position to take advantage of industry trends toward storage area networks and the software required to manage them (see Merrill Lynch Sizes Up Network Storage).

BakBone executives say the news also should help the company's efforts to start trading in the U.S. markets. BakBone now trades on the Toronto stock exchange (see Can US Market Stiffen BakBone?).

BakBone says a small round of layoffs contributed to improved first-quarter results. Letting go of less than 10 percent of its staff, officials say, left the company with 140 employees and was enough to boost the company's balance sheet.My mandate is to increase tangible shareholder value,” says Keith Rickard, BakBone's newly appointed president and CEO.Rickard was president of Sterling Software's storage management division before it was bought by Computer Associates International (NYSE: CA) for $4 billion in February 2000.

But sources say the layoffs have been more severe than the company has publically disclosed. While 10 percent layoffs may have been the cutoff point for helping financials this quarter, a sizeably larger percentage of staff have been cut since January, they say.

"[BakBone has] let go of about 70 people since the start of the year," said one industry analyst, who requested anonymity. The reorganization is also said to have included firing the COO and reducing the role of the founders. Rumor has it the company is presently seeking a new CFO as well.

BakBone's restructuring program resulted in a 22 percent drop in operating expenses from the fourth quarter of 2000 to the first quarter of 2001, contributing to a 25 percent reduction in net loss per share.

Net loss for the first quarter was $5.0 million, or$0.12 per share, compared with a net loss of $6.5 million, or $0.16 per share, for the preceding three-month period.BakBone's results also were helped by an acquisition. Pro forma results for the three months ended June 30 include the results of Tracer Technologies, acquired by Bakbone in June 2000. Management cited the increased sales of Tracer's product NetVault in North America as a leading contributor to the pro forma increase.

“We are heading in the right direction, these results quite clearly show growth,” says Bertha Edington, director of marketing and communications at BakBone. The company is waiting for the market to settle down before switching to trading in the U.S. It was unable to give a date but hopes this will happen before the end of the year.

— Jo Maitland, Senior Editor, Byte and Switch

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