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NDS profit slump

October 23, 2008

CA technology company NDS has reported a drop in revenue and net profit for its fiscal first quarter. Revenue for the quarter fell 11 per cent to $182.2 million, from $204.8 million in the corresponding quarter. Revenue from conditional access fell 19 per cent, and revenue from integration, development and support services increased by 4 per cent.

The company attributed some of the revenue decline to a trend among some of its customers to recycle the set-top boxes and smart cards when a customer leaves, and reusing the box and smart card for new customers. This practice reduced the demand for new NDS smart cards.

NDS recorded increased revenue from IPTV customers, and from gaming applications and residential gateway devices. Net profit fell to $13.38 million a drop of 71 per cent from 46.29 million in the corresponding quarter. The company claimed that currency fluctuations increased revenue by about $1 million, while cutting its operating profit by about $8.1 million for the quarter.

NDS chairman and CEO Dr. Abe Peled said: “NDS’s results this quarter reflect lower revenues from several large customers whose CA contracts have been renewed with certain volume discounts and new pricing to reflect different smart card change-over policies, as well as smart card recycling by certain customers. This is in line with our guidance for fiscal 2009. In addition, our results have been impacted by unusually large currency fluctuations during the period. At this point, the worldwide economic uncertainty has not been reflected in our operational results or outlook; however, we remain cautious and are monitoring the field results closely.”

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