"I hope that we're beginning to dig our way out of the hole," was how Pointer Telocation Systems Ltd. (Nasdaq:PNTR; TASE:PNTR) chairman Yossi Ben-Shalom yesterday described the company's financial results for the third quarter of 2009. The company swing to profit after reporting a loss for the second quarter.
Pointer provides vehicle location and roadside assistance equipment and services. The company services side has been less affected by the economic crisis, but its equipment sales have been hit.
Ben-Shalom added, "Until 2008, our equipment and software sales grew by 10-15% per quarter. We hired people, we were enthusiastic, and we counted the dollars." The slump in global vehicle sales, and customers cutting inventory forced Pointer to streamline and fire 15 employees.
Ben Shalom noted, "In the third quarter, there wasn’t yet a recovery in sales, but we returned to profit. The fourth quarter will be better at the orders level."
Pointer recorded $16.9 million revenue for the third quarter of 2009, 18% less than the $20.7 million for the corresponding quarter in 2008. Service revenue accounted for 68% of total revenue in the third quarter, up from 58% in the corresponding quarter.
GAAP-based net profit attributable to Pointer rose to $1.1 million ($0.23 per share) for the third quarter from $714,000 for the corresponding quarter. The company posted a GAAP-based net loss attributable to shareholders of $2.8 million for the second quarter. Non-GAAP net profit rose to $1.9 million for the third quarter from $1.6 million for the corresponding quarter.
Pointer had $3 million in cash at the end of September, and it is seeking to make acquisitions.
Ben-Shalom said, "We tried to exploit the crisis to acquire a US company for cash. We considered three deals, but we didn’t make them, because it turned out that it hard for us to digest the price levels."
In Israel in May, Pointer roadside services subsidiary Shagrir Ltd. acquired 51% of Car2Go Ltd., a provider of carsharing services in the metropolitan Tel Aviv area. Ben-Shalom did not rule out more acquisitions, possibly via share-swaps, but cautioned, "At the current price, I'm not prepared to dilute."
On the other hand, Ben-Shalom might increase his holding in the company from his current 37.5%, if shareholder Shaul Elovitch decides to sell his 14.8% stake held through Eurocom Group, which is acquiring the controlling interest in Bezeq The Israeli Telecommunication Co. Ltd. (TASE: BEZQ) through 012 Smile.Communications Ltd. (Nasdaq:SMLC; TASE: SMLC). If Ben-Shalom wants to buy Elovitch's stake, he will have to do so through an offer to purchase.
Ben-Shalom noted, however, "I don’t think that this money will help him acquire Bezeq. I assume that he wants to sell, he'll call me."
Pointer Telocation's share fell 10% yesterday on Nasdaq to $4.94, giving a market cap of $23.5 million. The share fell 1.8% by midday today to NIS 20.50.
Published by Globes [online], Israel business news - www.globes-online.com - on November 12, 2009
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