Ups and Downs for NJ Tech Firms’ Q3 Earnings
Some N.J. public tech companies reported their earnings last week. Wayside Technology Group Inc. (Shrewsbury) had good news for its investors, increasing net sales for Q3 2011 by 20 percent to $63.7 million, compared with $53 million for the same period in 2010. Third quarter sales for its TechXtend platform remained flat, but the firm’s Lifeboat Distribution segment increased 28 percent, with sales of $49.1 million, compared with $28.4 million in Q3 last year.
Speaking on a conference call last week, Simon Nynens, chairman and CEO, said the company has achieved those results by staying focused on costs, maintaining a conservative balance sheet and having no need for debt. During these challenging economic times, he noted, many software publishers are looking for alternatives to the traditional way they distribute their products. Wayside, he said, acts as an extension of software publishers’ internal sales and marketing organizations and makes money by knowing the products it sells, selling those products and not charging customers a menu of fees.
During the call, Nynens discussed the challenges of corporate cloud computing, pointing out that when a consumer is on the cloud it’s easy to switch a couple of applications off and on. However, when a company moves an employee from accounting to purchasing, there may be 15 apps that have to be switched off and 10 that must be switched on. Corporations are unwilling to go to each software publisher to switch these applications on and off. So there are tremendous hurdles still to be overcome in ensuring cloud computing is an efficient process, he said.
Heartland Payment Systems Inc. (Princeton) also had a great Q3, reporting net income of $12.7 million, or $0.31 per fully diluted share, on an adjusted basis, increases of 59 percent and 55 percent, respectively, compared with the same quarter last year. “We’ve achieved consistent strong performance this year across our key metrics: card-processing volume, same-store sales and volume attrition. We have also improved sales productivity and achieved cost efficiencies throughout the organization, all of which have contributed to exceptional earnings performance,” chairman and CEO Bob Carr said.
Carr was particularly critical of payment processors that have used so-called “Durbin dollars” to line their own pockets. The Durbin Amendment imposed a cap on debit interchange fees, also known as transaction fees. According to Carr, “Durbin dollars should be put where they belong: into merchants’ bank accounts. We believe the intent of Durbin was not to temporarily increase the profits for processors … We believe our business model is sustainable and will allow us to continue our organic growth well into the future, which we do not believe may be the case for those who sacrificed their customers’ interest for the sake of their own short-term profitability and 2012 bonuses.”
On the down side, Anadigics Inc. (Warren), a provider of semiconductor solutions in the broadband wireless and wireline communications markets, reported Q3 2011 net sales of $37.3 million. Although this represents a sequential increase of 4.7 percent from increased sales at key wireless OEMs, it is a decrease of 39.2 percent from Q3 2010. For the first nine months ended October 1, 2011, net sales were $116.3 million, a decrease of 25.7 percent over the prior year. During a conference call, Ron Michels, president and CEO, remained optimistic. “Our renewed commitment to reinforcing customer relationships” is beginning to gain momentum, he said. In particular, the company’s products have gained market share in Samsung (Seoul, Korea) smartphones, including the Galaxy S II and Wave 3. The company’s chips are in ZTE Corp’s (Shenzhen, China) Blade and a number of LG Electronics’s (Seoul, Korea) phones. Michels said the company is making progress on next-generation product development with a large reference design partner. He added he hopes to re-establish Anadigics as a technology leader.
