Kalamazoo Computer Group Plc, the West Midlands-based software and services company has reported net losses for the six months to September 30 of 514,000 pounds down from profits last time of 1.1m pounds on revenue that fell 4.0% to 33.8m pounds. Shares in Kalamazoo, one of the UK’s oldest software companies, took a further dive last week as the company announced half year losses, which it blamed on software development delays and lost sales. Six month losses came to 0.5m pounds, down from profits of 1.1m pounds last year, while revenue fell 4.0% to 34m pounds, and the shares fell 12% to 60.5 pence, depressed further by the cancellation of the interim dividend. The loss comes despite the 12m pound sale in July of Kalamazoo’s Security Print business, the division on which the company was founded one hundred years ago. The division was famous worldwide for its manual book keeping and ledger systems; the resource planning software which the company now sells is a modern day progression from its early bookkeeping systems, but the latest package, Elite, is causing problems. Elite is aimed at Kalamazoo’s biggest market, the UK’s 900 strong, franchised automotive dealers. But updating the software and adapting it to an international specification to suit its customers thirst for global software ‘solutions’ will cost over 6m pounds this year. Kalamazoo is in the uncomfortable position of having to adapt Elite to fit each of the major car manufacturers it supplies. But unlike many of the ERP vendors, Kalamazoo can’t charge directly for the costs of tailoring the package. But the company is convinced the investment in an international approach will pay dividends in the longer term. The group found some much needed financial support in September when Reynolds & Reynolds Co, the US software and systems giant, took a 26.5% stake in Kalamazoo at a huge premium to the then share price. If the board’s forecast for longer term profits created from the group’s repositioning doesn’t pan out, big brother may begin to stir up some further changes.
