Bloomberg News

Eurotech May Post Fifth Consecutive Loss as Cloud Demand Lags

October 04, 2011

Oct. 4 (Bloomberg) -- Eurotech SpA, whose miniature computers are used by Boeing Co. and Chevron Corp., may post a fifth consecutive annual loss as the economic slump cuts demand for its offerings including a cloud-computing service.

“It’s difficult to say if we will have profit,” Chief Financial Officer Sandro Barazza said in an interview in London. The uncertain outlook is also the result of the Japan earthquake in March and the economic slowdown in Europe and the U.S. “No one expected the situation in the U.S. or in Europe,” he said.

Eurotech, which introduced its Everyware Device Cloud almost a year ago, had banked on the product, which allows companies to access and share hardware, software, applications and data on any device, to help the Amaro, Italy-based company post net income for 2011. Eurotech is projected to have a profit of 1 million euros ($1.3 million) this year, based on the average estimate of 3 analysts compiled by Bloomberg.

“We were ready to connect all our devices to the cloud, but probably the customers decided to wait before investing,” Barazza said. “We are working to do our best for this quarter and after the last month we will see what will be our results.”

Eurotech, which first sold shares in November 2005, dropped 3.5 percent to 1.7 euros in Milan trading as of 11:17 a.m., giving the company a market value of 60.4 million euros. The stock has declined 9.7 percent this year. Finmeccanica SpA, Italy’s biggest defense company, owns 11 percent of Eurotech.

Net Losses

Eurotech, whose clients include Lockheed Martin Corp. and Johnson Controls Inc., also makes high-performance computers, embedded boards and portable, nano devices such as wrist- wearable computers. Its mobile computers are used in the logistics, transportation, health-care and defense industries.

Goldman Sachs Group Inc. this week cut its global growth forecast for this year and next, predicting recessions in Germany and France as Europe’s economy stalls and the risk of a contraction in the U.S. grows.

In 2010 Eurotech posted a net loss of 6.1 million euros compared with a loss of 9.6 million euros a year earlier. Revenue gained 19 percent to 99.3 million euros. The company had its last annual profit in 2006.

Barazza says he continues to “see a good opportunity in the cloud.” The global market for cloud services may surge to $148.8 billion in 2014 from $68.3 billion in 2010, according to researcher Gartner Inc.

Eurotech, which gets between 25 and 30 percent of its revenue from Japan and has been operating in India for two years, aims to further expand in Asia, Barazza said.

“South Korea could be a good market for industrial contracts,” he said, adding that the company is also looking to China. The company has about 10 million euros in cash for further acquisitions, Barazza said.

--Editors: Simon Thiel, Kenneth Wong

To contact the reporter on this story: Katie Linsell in London at Klinsell@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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