Integral Systems falls on dowgrade, slow 2Q

Jan. 2, 2002 4:43 p.m. PT

2 min read

Integral Systems Inc. (Nasdaq: ISYS) tumbled 21 percent Monday on slowing growth prospects and an analyst downgrade.

Shares in the company, which makes software and control systems for satellite systems were down 3 7/16 to 14.

In its second quarter report Friday, the company said contract delays accounted for a decrease in net income, and would slow growth for the third quarter as well.

ING Barings downgraded the stock from "buy to "sell" Monday following the news.

Net income decreased from $828,000, or 14 cents per share (basic), in the second quarter of fiscal 1999 to $787,000, or 10 cents per share (basic), in the second quarter of fiscal 2000. Revenue for the quarter declined from $9.8 million in the second quarter of fiscal 1999 to $9.6 million -- a decrease of about 2 percent.

The company said that, as previously reported, delays in the award of certain contracts have had a negative impact on the second quarter. It added that none of its business has gone away, and it still expects to book all of the contracts over the next few months. Nor does it believe there is any systemic cause for the delays, or a general industry downturn. It called the delays a "separate set of isolated circumstances for a few individual customers.''

Integral Systems said it continues to pursue new business, and has more opportunities in the pipeline now than at any other time in our corporate history. The effort has come at a cost of higher SG&A , which was over $1.7 million, or 80 percent higher than for the same quarter last fiscal year. The company predicted the investment should result in substantial growth in 2001 and 2002.''

Operating income also fell to $610,000 for the quarter ended March 31, 2000 from $1.4 million for the comparable quarter in fiscal year 1999. The figure includes one-time charge of about $140,000 for an acquisition attempt terminated due to market conditions.

Integral's clients include the US government, which accounts for 65 percent of sales, Alcatel (NYSE: ALA) and TRW (NYSE: TRW).