ConvergeNet expects earnings drop

LISTED ICT infrastructure provider ConvergeNet expects to reports lower earnings for the full year to August.

The company says earnings per share are expected to be between 15% and 25% lower than last year, while headline earnings per share will be between 35% and 45% lower. ConvergeNet did not provide reasons for the lower earnings.

A year ago, ConvergeNet turned over  R1 billion, which was an improvement on the R923.9 million it had reported in the 2008 financial year.

However, headline earnings per share were lower, down from 6.2c in 2008 to 4.9c, while earnings per share were also lower, at 5c compared with 6.2c in the 2008 financial year. This was the result of more shares being in issue after the company acquired Chrystalpine.

At the time, ConvergeNet pointed to delayed spend in the corporate and public sectors, which made trading conditions difficult and increased competition placed pressure on margins.

Lower net profit was the result of investments in resources and skills that were not balanced by an expected increase in revenue, due to slower spending. The trend continued during the first half of the year to February, which caused revenue to drop.

ConvergeNet was established in 2005 to take advantage of the growing need for convergence solutions in the ICT industry. It acquired a cash shell called Vestor Investments, listed on the JSE in February 2007.