Calluna Plc, the Scottish microdisk drive manufacturer, admitted it couldn’t afford another setback after disappointing shareholders again, this time with poor financial results. Investor patience is running out, with shares in the Glenrothes-based company falling 8.2% on Wednesday to 14 pence after it posted a pre-tax loss of 3.2m pounds ($5.1m) on revenue of 24.6m […]
Calluna Plc, the Scottish microdisk drive manufacturer, admitted it couldn’t afford another setback after disappointing shareholders again, this time with poor financial results. Investor patience is running out, with shares in the Glenrothes-based company falling 8.2% on Wednesday to 14 pence after it posted a pre-tax loss of 3.2m pounds ($5.1m) on revenue of 24.6m pounds ($39.2m).
The results, below projections given at the announcement of its half-year results last December, come after falling sales prompted a profit warning in February and cash flow problems forced a 5.8m ($9.2m) rights issue two months ago. Shares recovered yesterday to 14.75 pence, just 3.3% short of their 15.25-pence trading price before the results were announced.
But Alan Bates, Calluna’s chairman, said the company had turned a corner, with June orders for its PCMCIA Type III drive already exceeding total sales for April and May. The firm hit a hole in sales in January and February after orders dried up. After recovering slightly in March, orders slumped again in April and May despite price cuts.
The company was vulnerable to depressed demand, with its new slimline PCMCIA type II disk drive – which can store 1Gb of data on a drive 1.8-inches wide and 5mm thick – not yet ready to ship. Making matters worse, its Hardwall PC card, which intelligently partitions hard drives and is claimed to make them immune from hacking, failed to capture orders despite being re-launched at the Comdex trade show in Las Vegas last November.
Sales of the Type III drive had boomed late last year after Calluna’s main customer, Integral, went out of business sparking massive orders. But the company also fell victim to canceled orders after it allocated proportions of orders to waiting customers only to find that they were deliberately over-ordering to get needed units and then canceling unwanted ones.
As well as settling outstanding debts, the 5.8m-pound rights issue was used to finance production capacity for the Type II drive at Calluna’s Glenrothes plant. The product will hit the market in August with bulk production sub-contracted to a Singapore-based manufacturer, said Bates. Advance orders for the new drive are already in the thousands, he said.
Bates said Calluna would strike licensing deals with OEMs to market Hardwall and looked to new success in vertical markets with the product. He said the product would be picked up by organizations with minimal IT support, which would be able to protect PCs from virus corruption with no supervision.
Calluna has a trial order of 230 Hardwall cards from a US-based hotel chain which installed PCs in guest rooms said Bates. It will also give 1,000 Hardwall cards to Scottish schools under the UK government’s National Grid for Learning drive to install Internet-enabled PCs in all classrooms.
Bates said he was not worried by IBM Corp’s imminent entry into the micro disk drive market with its 1-inch model. They [IBM] will have to convince OEMs to change the hole size – there will be millions of holes (2-inch and 3-inch) they can’t fit which we will be able to, said Bates.