Now Spirent is forced to make huge New Economy write-off
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Your support makes all the difference.Spirent, the phone network testing company whose customers include Cisco Systems, revealed a £762m full-year loss yesterday as a result of a huge goodwill write-down on a business bought at the height of the telecoms boom.
Spirent, which changed its name from Bowthorpe Group in 2000, went on a huge acquisitions spree during the dot.com frenzy. The company has now taken a £724m write-down on the value of Hekimian Laboratories, a US network monitoring business it bought for £1.17bn in November 2000.
Nicholas Brookes, Spirent's chief executive, said he did not regret the deal. "It is a great company and we are delighted with it," he said. "It was an all-share deal when our shares were over 600p. At least we didn't pay cash."
The stock market shrugged off the hit, concentrating instead on a reassuring current trading statement which showed that Spirent's main telecoms testing business had stabilised in the last six months of 2001 and during January of this year. The shares surged by as much as 16 per cent on the news though they eventually closed 7.3 per cent down at 130p.
Mr Brookes admitted it was difficult to forecast future demand but said its order rate had remained level for six months. "I don't believe anyone knows when the market will recover but we believe it is a question of when rather than if," he said.
One analyst said: "We're looking for companies to tell us when things will improve, and the simple truth is they don't know."
Mr Brookes said he was confident Spirent was well placed for the upturn when it arrives after cutting costs including 500 jobs announced at the time of the group's profits warning in August. He said the group's costs were now in line with the reduced revenue the company was generating.
Spirent announced the disposal yesterday of its aerospace component business to Curtiss-Wright of the US for $60m (£42m). Other disposals are likely as the group concentrates on growth sectors.
The group's pre-tax profits in the year to 31 December were 19 per cent down at £101m, excluding exceptional items. Sales were 15 per cent higher at £802m. The dividend was unchanged at 3p.
Spirent said it had cut annual costs by £35m while still investing in new products and nearly halving its debt to £179m. The company has also generated £141m of cash in 2001, up 12 per cent on the year before. Mr Brookes said: "Even if the economy remains flat, we should still generate cash and profits this year."
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