CDC Software Estimates Record First Quarter 2008 Revenue
April 17 2008 - 7:53AM
Business Wire
CDC Software, a wholly owned subsidiary of CDC Corporation,
(NASDAQ: CHINA) and a leading provider of industry-specific
enterprise software applications and business services, today
announced preliminary revenue results for the first quarter of
2008. CDC Software expects total revenues for the first quarter of
2008 to be between US$84.6 million and US$85.6 million, which would
be a first quarter record for the company and an increase of
approximately 12 percent from US$76.2 million in the first quarter
of 2007. Software license revenues are expected to be approximately
US$12.0 million which would represent a decrease of 15.5 percent
from US$14.2 million in the first quarter of 2007. "We are pleased
to begin 2008 with our best-ever first quarter revenue in the
history of CDC Software,� said Eric Musser, president and CEO of
CDC Software. The first quarter is typically the weakest quarter
seasonally in the software industry and in spite of the slowing
economy which has impacted our new license sales and the software
industry overall, our overall results reflect the strength of our
installed base of over 6,000 customers globally. Our revenues from
maintenance, services and software sales to our existing customers
were virtually on par with our original budget for the quarter. We
believe that these recurring revenues and increasing cross-selling
opportunities with acquired products will help keep us in a very
healthy position as companies postpone new software purchases but
continue to invest in software and services related to their
existing systems. To address this continuing demand from our
exiting customers, we are in the process of launching major
upgrades and additional product modules for our primary product
lines including Pivotal CRM, Saratoga CRM and Ross Enterprise. We
believe these enhancements and new add-on products will drive
increases in upgrades within our installed base of customers will
help spur our consulting services and software deployment
expansions. �In addition to our focus on leveraging the full
potential of our installed base of customers, we are also taking
steps to preserve and improve our bottom-line profits. We are very
pleased with our continuing progress in streamlining our global
research and development function through the expansion of our
highly cost-effective centers in China and India. This shift is
enabling us to expand and accelerate the development of strategic
products while we keep our overall development costs at targeted
levels. Last fall, we enacted cost reduction initiatives that
reduced annual operating expenses by approximately US$7.5 million.
We recently completed another round of consolidation to further
improve efficiency by eliminating duplicate functions among our
various acquired companies. These moves have resulted in additional
annualized cost savings of approximately US$8.8 million. With our
lower cost base and the strength of our 6,000-plus global customer
base, I believe CDC Software is in the best position ever in
company history to continue our growth strategy, and continue to
see improvements in operating margins over the next few years.� CDC
Software has also been aggressively expanding its operations in
China. Most recently, CDC Software entered a binding agreement to
acquire a stake in Tenly Software, one of China�s leading providers
of business intelligence solutions. Tenly�s flagship product,
Markway Analysis System, is being used widely throughout the
national government and ministry in China. Markway Analysis System
has been certified by the Chinese Statistics Association as the
national standard of statistical analysis and data mining platform,
and it has been adopted by China�s National Bureau of Statistics as
the official analytics tool and recommended for use nationwide. It
is also used by the Chinese Ministry of Education as the designated
software for national testing and NIT certification examinations
and has been adopted by the National Evaluation Center of
Information Technologies as the designated software for data
analysis in the Fortune 500 companies of China. Last month, CDC
Software also acquired a majority stake in Integrated Solutions
Limited (ISL), a Hong Kong-based vendor of ERP systems that mirrors
CDC Software�s focus and success as a vertical industry specialist.
The company provides complete ERP solutions designed to address the
needs of small and medium-sized discrete manufacturers in the
electronics, toy, watch and furniture industries in China. ISL has
more than 150 customers in southern China, including Ansen
Electronics, Artfield Manufacturing, Verint Systems, Unilux Time,
and Kendy Enterprise. CDC Software has already successfully
completed a joint sale including the ISL discrete ERP system and
CDC Software�s Platinum HRM system for China. In the Fall of 2007,
CDC Software agreed to form a joint venture with FlexSystem
Limited, one of the leading enterprise software solution providers
in China. CDC Software intends that the joint venture will develop
human resources, payroll and accounting software as a service
(SaaS) applications for initial deployment throughout China, and
that these applications will be marketed and sold directly by CDC
Software and offered on a subscription basis with very low up-front
costs. �China is recognized as the largest manufacturing market in
the world and one of the world�s largest and most rapidly growing
markets for enterprise software,� said Peter Yip, executive
chairman of CDC Software. �We are leveraging our established
presence and experience in China and our expertise in enterprise
software systems for manufacturers to take advantage of this
significant growth opportunity. As we continue to grow and maintain
our competitive advantages as vertical industry specialists in our
other established geographies, such as North America and Europe, we
expect our China operation to grow even more rapidly and become an
increasingly strategic market for us.� About CDC Corporation The
CDC family of companies includes CDC Software focused on enterprise
software applications and services, CDC Games focused on online
games, and China.com focused on portals for the greater China
markets. For more information about CDC Corporation (NASDAQ:
CHINA), please visit www.cdccorporation.net. About CDC Software CDC
Software, The Customer-Driven Company�, is a provider of enterprise
software applications designed to help organizations deliver a
superior customer experience while increasing efficiencies and
profitability. CDC Software�s product suite includes: CDC Factory
(manufacturing operations management), Ross ERP (enterprise
resource planning) and SCM (supply chain management), CDC Supply
Chain (supply chain management, warehouse management and order
management), Pivotal CRM and Saratoga CRM (customer relationship
management), CDC MarketFirst (marketing automation and lead
management), Respond (customer complaint and feedback management),
c360 CRM add-on products, industry solutions and development tools
for the Microsoft Dynamics CRM platform, Platinum HRM (human
resources) and business analytics solutions. These
industry-specific solutions are used by more than 6,000 customers
worldwide within the manufacturing, financial services, health
care, home building, real estate, and wholesale and retail
distribution industries. The company completes its offerings with a
full continuum of services that span the life cycle of technology
and software applications, including implementation, project
consulting, outsourced business services, application management
and offshore development. CDC Software is the enterprise software
unit of CDC Corporation (NASDAQ: CHINA) and is ranked number 12 on
the MBT 2007 Global 100 List of Enterprise and Supply Chain
Management Application vendors. For more information, please visit
www.cdcsoftware.com. Cautionary Note Regarding Forward-Looking
Statements This press release includes "forward-looking statements"
within the meaning of the United States Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include statements regarding our expectations regarding revenues
for CDC Software for the first quarter of 2008 as well as the
components and composition of such revenues; our beliefs regarding
the strength of our installed base customers and sales; our beliefs
regarding customer preferences; our beliefs regarding recurring
installed base revenues and increased cross-selling opportunities
with acquired products sustaining our financial and business
position; our beliefs regarding our position and ability to
continue our growth strategy and continue to see improvements in
operating margins over the next few years; our ability to
successfully launch major upgrades and additional modules for our
products and our beliefs that these will drive increases in
upgrades among our installed base customers and spur growth in our
consulting services and development expansions; our beliefs
regarding our past and present cost savings initiatives, including
restructurings and headcount reductions, and the effects thereof,
including effects on out financial performance and profit margins;
our expectations regarding our continued expansion in China; our
intentions regarding our joint venture with FlexSystems and the
products and strategies that may be pursued thereby; our ability to
leverage our established presence and experience in China in order
to grow and expand in the future; our expectations regarding the
growth and expansion of the Chinese market; and other statements
that are not historical fact, the achievement of which involve
risks, uncertainties and assumptions. If any such risks or
uncertainties materialize or if any of the assumptions proves
incorrect, our results could differ materially from the results
expressed or implied by the forward-looking statements we make.
These statements are based on management's current expectations and
are subject to risks and uncertainties and changes in
circumstances. There are important factors that could cause actual
results to differ materially from those anticipated in the forward
looking statements, including the following: (a) the ability to
realize strategic objectives by taking advantage of market
opportunities in targeted geographic markets; (b) the ability to
make changes in business strategy, development plans and product
offerings to respond to the needs of current, new and potential
customers, suppliers and strategic partners; (c) the effects of
restructurings and rationalization of operations; (d) the ability
to address technological changes and developments including the
development and enhancement of products; (e) the entry of new
competitors and their technological advances; (f) the need to
develop, integrate and deploy enterprise software applications to
meet customer's requirements; (g) the possibility of development or
deployment difficulties or delays; (h) the dependence on customer
satisfaction with the company's software products and services; (i)
continued commitment to the deployment of the enterprise software
solutions; (j) risks involved in developing software solutions and
integrating them with third-party software and services; (k) the
continued ability of the company's enterprise software solutions to
address client-specific requirements; (l) demand for and market
acceptance of new and existing enterprise software and services and
the positioning of the company's solutions; (m) the ability of
staff to operate the enterprise software and extract and utilize
information from the company's enterprise software solutions; (n)
the continued cooperation of our strategic and business partners;
(o) risks relating to economic conditions and other matters beyond
our control; (p) the risk that the preliminary financial results
provided herein could differ from our actual results of operations
and financial condition; and (q) the continued strength of revenues
from our installed base customers.. Further information on risks or
other factors that could cause results to differ is detailed in
filings or submissions with the United States Securities and
Exchange Commission made by CDC Corporation in its Annual Report
for the year ended December 31, 2006 on Form 20-F filed on July 2,
2007. All forward-looking statements included in this press release
are based upon information available to management as of the date
of the press release, and you are cautioned not to place undue
reliance on any forward looking statements which speak only as of
the date of this press release. The company assumes no obligation
to update or alter the forward looking statements whether as a
result of new information, future events or otherwise.
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