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NextWindow records operating profit as sales jump 52 percent

Monday 8th October 2012

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NextWindow, the local touch-screen developer bought by Canada's Smart Technologies for US$82 million in 2010, posted a slim annual operating profit after boosting sales 52 percent and narrowed its bottom-line loss, according to its latest financial statements.

Smart Technologies NW Holdings, the entity used by the Canadians to buy NextWindow, made an operating profit of US$764,000 in the 12 months ended March 31, compared to a loss of US$4.2 million a year earlier, according to financial statements lodged with the Companies Office. Revenue climbed to US$37.4 million from US$24.6 million a year earlier, accounting for about 5 percent of Smart Technologies' annual group sales.

NextWindow made an annual net loss of US$13.9 million, smaller than the loss of US$41.3 million in 2011 when the company took a US$24.1 million impairment charge to the value of its goodwill.

Smart Technologies flagged its disappointment with the NextWindow acquisition in its 2012 annual report, saying the New Zealand firm hasn't performed "as well as we had anticipated."

NextWindow increased its gross margin by 2 percentage points to 66 percent, and reduced its operating costs in the March year, including cutting its personnel expenses by 9.4 percent to US$8.7 million.

The Canadian group's annual profit more than halved to C$31.8 million in the year ended March 31, as revenue fell 5.6 percent to C$745.8 million. Since then, Smart Technologies' first-quarter profit plunged by 93 percent to just C$1.5 million in the three months ended June 30 as sales shrank 14 percent and the Canadian firm was hit by a C$6.3 million loss on foreign exchange.

Smart Technologies bought NextWindow in 2010, having filed suit for unspecified damages against the local firm a year earlier, when it accused the kiwi company of violating its Digital Vision Touch patent technology.

In August, the Canadian group embarked on a cost-cutting strategy to strip out 10 percent of annual cash operating expenses to some US$200 million by the third quarter of the 2013 financial year.

Shares in Smart Technologies gained 2.6 percent to US$1.55 on the Nasdaq, having shed 58 percent this year. The stock, which is also listed on the Toronto Stock Exchange, is rated an average 'hold' based on seven analyst recommendations compiled by Reuters, with a mean target price of US$2.78.

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