BTG Inc, the Fairfax, Virginia-based systems integrator, has warned that it expects to report a loss for its third quarter, which ends December 31. The company is blaming three factors for the poor showing in a quarter when First Call was expecting earnings per share of $0.24. Firstly, it is restructuring its cable internet service, to move it from subscriber-based revenue model to one based on engineering and integration service fees. BTG claims it has lost considerable amounts of money by offering those services for free to cable companies in return for a piece of subscriber fees which have not materialized. Secondly, BTG says it needs to improve margins in its commercial operations – it does a great deal of government work – and has lost money aggressively bidding for jobs with little or no profit potential. Lastly, margins for the government business dropped in the quarter from 11-13% to around 7% based on changes in government spending schedules. BTG is restructuring its product reselling unit to create a more streamlined operation that focus specifically on the government business and thereby reduce costs in that segment. The rest of the product reselling unit will most likely concern itself strictly with the commercial side of the business, especially after closing the merger with commercial network integration firm Micros-to-Mainframes Inc (CI No 3,238). The deal is expected to be sewn up sometime in the first calendar quarter of 1998.
