24/10/2012

Net Insight AB : Interim Report January - September 2012

Net Insight AB [publ] Corporate Reg. No 556533-4397

Third Quarter 2012

·         Net Sales of SEK 60.3 million (75.4) corresponding to a decline of 20.0% compared with the same period previous year. The decline in comparable currencies amounts to 13.2%.

·         Operating earnings of SEK -3.6 million (15.5), corresponding to an operating margin of -6.0 % (20.6).

·         Earnings per share of SEK -0.01 (0.04).

·         Total cash flow of SEK million -9.2 (4.8).

·         An efficiency and costs reduction program is introduced aiming at reducing the cost base by SEK 25 million on an annual basis with full effect from January 1, 2013. This includes termination of consultancy contracts as well as up to 10 positions being made redundant.

January - September 2012

·         Net sales of SEK 212.0 million (214.2) corresponding to a decline of 1.0 % compared with the same period previous year. The decline in comparable currencies amounts to 0.1%.

·         Operating earnings of SEK million 5.0 (26.7), corresponding to an operating margin of 2.3 % (12.5).

·         Earnings per share of SEK 0.04 (0.07).

·         Total cash flow of SEK -5.6 million (-40.5).

Challenging development in certain markets

After 23 consecutive profitable quarters we report negative operating earnings of SEK -3.6 million for the third quarter. It was mainly our business in Eastern Europe and the Middle East that fell significantly short of expectations. The third quarter started off in a strong way but half way, significant project delays occurred.

Financials are weaker than the previous year mainly as a result of lower revenues. We have invested significantly over the last few years in R&D to broaden the product portfolio and in Sales and Marketing to broaden our customer base and geographic reach. We are now at the stage where we will focus efforts and put in place an efficiency and cost reduction program aiming at reducing the cost base by SEK 25 million on an annual basis, with full effect from January 1, 2013. A restructuring charge estimated to SEK 7 million will affect the 2012 fourth quarter result.

The Broadcast and Media Network (BMN) business showed a significant win with a major network provider in South Korea that ordered our Nimbra MSR Platform for contribution and distribution services throughout South Korea. There are many DTT/TV distribution projects remaining around the world that we are following very closely. This quarter we won another DTT rollout for the national broadcaster in Austria, ORS. Many DTT upgrades and deliveries to existing DTT customers occurred during the quarter in several countries.

Together with many of our customers we were involved in live transmissions from the London Olympic Games. We have pioneered what it is called remote production meaning that large and small broadcasters are able to significantly reduce technical production costs and focus on content creation to become more competitive. The London Olympic Games was the first really large sporting event where remote productions were commercially used to gain efficiencies.

During the fall Net Insight launched several new products and features improving our competitiveness in the access market and significantly improving capacity, network management and Ethernet capabilities.

I am disappointed by the weak quarterly result and we do face delays when it comes to larger project procurements. The timing of larger projects is and always will be difficult to specify but I am convinced that a significant number of them will happen and, that we are tracking and pursuing the business opportunities within our addressable market in a good way, which is the key determining factor for future growth.

Net Insight AB discloses the information provided herein pursuant to the Securities Market Act and/
or the Financial Instruments Trading Act. The information was submitted for publication on
October 24, 2012 at 08.45 am CET.

About Net Insight

Net Insight delivers the world's most efficient and scalable transport solution for Broadcast and IP Media, Digital Terrestrial TV, Mobile TV and IPTV/CATV networks.

Net Insight products truly deliver 100 percent Quality of Service with three times improvement in utilization of bandwidth for a converged transport infrastructure. Net Insight's Nimbra(TM) platform is the industry solution for video, voice and data, reducing operational costs by 50 percent and enhancing competitiveness in delivery of existing and new media services.

More than 150 world class customers run mission critical video services over Net Insight products in over 50 countries. Net Insight is quoted on the NASDAQ OMX, Stockholm.
For more information, visit
www.netinsight.net

   

Net Insight AB : Interim Report January - September 2012