Maybe he should consider a different carrier? Does Davy still have any credibility as a stockbroker after their call on Elan?!
By Gavin Daly
Dublin, Ireland, 3 March, 2002
The long-term prospects of embattled e-payments company Trintech have been questioned by the
company's own stockbroker. In a research note, Davy Stockbrokers analyst Paul Phelan said
Trintech would "probably be scaled back significantly, leaving uncertainties about long-term growth
prospects".
Phelan was responding to the company's fourth quarter and full-year results which showed very
poor top line performance, despite a broad restructuring.
"Uncertainties surround the long-term prospects for the company given the depth of the
restructuring and the ongoing weakness in the software licensing market," Phelan said.
Phelan, who owns shares in Trintech, said the company's management had "focused on convincing
investors that the company's survival is not at issue" in a conference call. Trintech last week
reshuffled its management, appointing Cyril McGuire as chief executive officer in addition to his role
as chairman.
Current chief executive John McGuire will become president in an effort "to focus on the
achievement of short-term profitability", according to Phelan.
He said that the company should be pro forma cash positive in the final quarter of the year, but
highlighted that Trintech had not given specific revenue guidance for coming quarters.
In its fourth quarter, Trintech reported revenues of just $15.5 million, which were down 11 per cent
from the previous quarter and flat year on year. Phelan had expected revenues of $17.9 million for
the quarter.
He said that there was a "strategic concern with the substantial fourth quarter decline".
A 27 per cent fall in licensing revenues to $6 million made up most of the shortfall from Davy's
guidance.
Phelan said that the quarter-on-quarter decline in licensing revenue was the first on record and a
worrying trend.
"Licensing revenue is a key driver of margins, growth and the long-term business model." Phelan
was also concerned with the fourth quarter net loss of $52.5 million and a cash burn of $13 million
in the quarter.
That left Trintech with $60 million in cash at the end of the last quarter.
At a share price low of $1.15 on the Nasdaq late last week, the company had a market capitalisation
of just $69 million.
Dublin stockbroker NCB said it had discontinued its detailed research of Trintech, as the company's
share price had slumped and it was now a small cap stock.
International broker Deutsche Banc Alex Brown downgraded Trintech from a Market Perform to a
Buy after the results.
Trintech'‡‡s growth in doubt
siness
