Datatec Systems missed analysts' estimates in its third quarter Monday, posting a loss of $1 million, or 3 cents a share, on sales of $21.4 million.
First Call consensus expected it to lose 1 cent a share in the quarter.
Datatec (Nasdaq: DATC) shares closed up 1 to 17 5/8 ahead of the earnings report.
The $21.4 million in sales marks a 10 percent improvement compared to the year-ago quarter when it lost $1.6 million, or 5 cents a share, on sales of $19.4 million.
"We are very encouraged by our ability to improve margins and increase revenue in the midst of traditionally our slowest quarter and the lockdowns associated with Y2K," said CEO Isaac Gaon in a prepared release. "Our backlog continues to grow suggesting even greater revenue growth going forward."
In the release, company officials said they are considering spinning off the business-to-business software unit, eDeploy, at some point in the future.
In fact, Datatec separated the eDeploy.com unit's sales and earnings from the rest of the company.
For the quarter, eDeploy.com lost $542,000, or 2 cents a share, on sales of $490,000.
Last quarter, Datatec posted a profit of 2 cents a share.
Its shares moved up to a 52-week high of 19 in February after slumping to a low of 2 1/16 in November.
Both analysts tracking the stock maintain a "buy" recommendation.
First Call consensus expects it to earn 7 cents a share in fiscal 2000.>