As the new CEO of InforMax, Andrew Whiteley has nowhere to go but up. In his first week on the job, the company issued a warning that its first-quarter 2002 earnings would fall short of expectations and witnessed its stock plummet to an all-time low of $1.16 on April 5.
But, while admitting “it’s not the best thing to have to make these types of announcements just a few days into the new role,” Whiteley, who officially replaced Alex Titomirov on April 1, remained stubbornly optimistic about the company’s future in a conference call to discuss the disappointing preliminary results.
Despite a 44 percent drop in revenue, attributed to the absence of GenoMax bookings during the quarter, and an 86 percent increase in losses over the year-ago period, “the organization has got the potential to be successful in the future,” Whiteley maintained.
But analysts and investors aren’t reassured by Whiteley’s confidence. Revenues for the quarter are expected to be $3.7 million vs. $6.6 million in the year-ago period, total bookings dropped 45 percent to $3.9 million, and the company’s net loss was $6.9 million, excluding non-cash charges and a $775,000 workforce reduction charge. This translates into a loss of $.27 to $.28 a share, well beyond the company’s expected loss of $.20 to $.22 per share and analysts’ estimates of a loss of $.21 per share. The company’s year-ago net loss per share was $.19.
“Can you give us any reason why we should be buying this stock at these levels?” demanded one analyst on the call. Unfazed, Whitely responded that under his leadership, InforMax will simply “do much better than we have over the past few months.”
Responding to the question of whether InforMax will remain a standalone business, Whiteley was quick to note that he wouldn’t have signed on to the job of CEO if his plan were to sell the company. “We’re here to put forward a successful product-based strategy that will take the company forward to profitability,” he insisted.
Strategic Plan Still Brewing
But Whiteley’s vision for InforMax’s future remains under wraps. In line with the schedule he set for himself upon taking the helm of InforMax in mid-March, Whiteley said he would not issue any forward-looking statements until he has completed a review of operations. While that period was initially supposed to last 90 days, Whiteley said some details of the company’s strategic outlook would be provided in early May, when the company plans to release its final results for the first quarter.
Although the first-quarter news may appear dire, the company did offer some positive nuggets. For example, while no GenoMax deals were closed, none of the quarter’s prospective deals were lost to competitors, according to CFO John Green. The lack of sales was due solely to delayed purchasing decisions, he said, and the quarter’s prospective customers still “remain prospects” for the second quarter. Green said the company also saw “revenue momentum” for its Vector NTI suite during the quarter due to “very significant deals with various state university institutions,” with total revenues of $2.2 million.
In addition, InforMax still has $57 million in the bank, enough to last for at least 24 months, according to the company’s 2001 10-K. However, with a market cap of $29.7 million at press time, its low share price and strong cash position could make InforMax an acquisition target despite Whiteley’s arguments to the contrary.
“Obviously, we are an attractive company,” Whiteley conceded, “and obviously the board will continue to look at any offers or propositions that come forward.” However, he noted, the primary goal for InforMax “is to be a strong product company and be successful in our own right.”