RWD's profits decline 86 percent in first quarter

Y2K-related deferrals of contracts blamed for sluggish business

Information technology

April 25, 2000|By Kristine Henry | Kristine Henry,SUN STAFF

RWD Technologies Inc., recovering from business it lost as companies spent their information-technology budgets on preventing the Y2K bug, reported yesterday that its first-quarter profit dropped 86 percent to $539,500, or 4 cents a share.

Revenue for the three months that ended March 31 was $30.8 million, down 7 percent.

"They were slightly above our revised expectations," said William Loomis, an analyst at Legg Mason Wood Walker in Baltimore, who had expected $30 million in revenue and earnings per share of 3 cents.

Loomis said the company was a bit late to move into e-business, "but the company is moving its business to some of these areas, and traditional IT spending that was hurt by Y2K should pick up."

The Columbia company helps businesses streamline manufacturing processes, aids in the implementation of new software programs and provides Web design services.

"We came out of the gate very strong in the first quarter of 1999 but shortly thereafter began to see our financial results decline due to Y2K-related contract deferrals," said William M. Bambarger Jr., vice president and chief financial officer at RWD. "We made significant progress so far this year, ending a three-quarter financial decline."

Last week, RWD announced it was awarded a five-year contract by Ford Motor Co. that will bring the company $50 million to $90 million during the life of the agreement. RWD will implement "lean manufacturing," which helps companies reduce waste and increase efficiency, at four Ford plants.

RWD shares closed down $1.5625 yesterday at $7.1875.

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