Magic Software Enterprises (Nasdaq: MGIC), povider of state-of-the-art application development technology and business solutions, announced today results for the first quarter ended March 31, 2001. Total revenues for the first quarter 2001 were $20.0 million as compared to $21.7 million for the comparable period in 2000, a 9% decrease over last year.
Pro forma net loss for the first quarter (which excludes amortization of goodwill and intangibles, and any non-recurring expenses) was $2.8 million or $0.09 loss per share, compared with the $4.5 million pro forma net income or $0.16 earnings per share posted for the same period a year ago.
Actual (or GAAP) net loss for the first quarter of 2001 was $9.4 million or $0.32 loss per share, compared with the $4.0 million net income or $0.15 earnings per share recorded one year ago. "Our first quarter results reflect the sharp decline in capital spending in the information technology sector, and are consistent with the realization that there will be periods of growth in our industry both above and below expected levels," said Menachem Hasfari, chief executive officer of Magic. "However, given our strong cash position, we continued to invest in new products, R&D, and our sales and service capabilities, and I feel confident that we will emerge stronger than ever from the current economic downturn, returning to profitability by the second half of this year."
The Company took a $5.5 million restructuring charge during the quarter as a result of a cost-reduction plan aimed at closing certain operations in areas where market demand had significantly moderated. A significant portion of this charge is related to the closing of Caswell, a Magic subsidiary and application company in the Netherlands, which in part was due to the lack of cooperation of one of Caswell’s major shareholders.
"Magic is using the current slow period in the industry to prepare its infrastructure to take advantage of the long-term growth potential of the software market," added Hasfari. "Looking forward, we remain focused on maximizing long-term earnings by continuing to deliver increasingly innovative application development technology and business solutions designed to meet our customers’ critical needs."
Magic Software Enterprises, a member of the Formula Group (Nasdaq: FORTY), develops, markets and supports software development and deployment technology that enables enterprises to accelerate the process of building and deploying applications that can be rapidly customized and integrated with existing systems. Magic technology, applications and professional services are available through a global network of subsidiaries, distributors and Magic solutions partners in approximately 50 countries. The Company’s North American subsidiary is located at 1642 Kaiser Avenue, Irvine, Calif., 92614, telephone (949) 250-1718, fax (949) 250-7404, http://www.magicsoftware.com.
The Formula Group is an international information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products and producing computer-based solutions.