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April 18, 1994

ASK ACKNOWLEDGES A COUPLE OF APPROACHES AS IT EXPLAINS AWAY DREADFUL FIGURES

By CBR Staff Writer

There have been one or two unsolicited offers to buy the company which have been rejected, according to Mike Hedger, managing director of Ask Group Inc in the UK, talking at a briefing about the third quarter results. The company is categorically not for sale, although he added that any company is for sale as a publicly owned company. The firm reported a loss of $68.9m to the third quarter ended March 31, against a loss of $674,000 last time on turnover that dropped 14% to $86.8m. This included a substantial restructuring charge of $45m, a large chunk of which grew out of reductions in staff numbers. Total headcount will have fallen by close to 400 by the end of this month, leaving a staff of 2,000 for the whole company. Most of the rest of the charge related to the cost of closing facilities and non cash write offs of purchased intangibles. The number of offices in the US will be reduced to around 20. Hardware sales fell 71% to $3.8m, while software revenue fell 15% to $39.6m. It used to sell turnkey systems running its software but has made a conscious decision to shift away from hardware as there is not enough money in it. Income from services was up 6.8% to $43.4m. The operating loss figure includes a one off provision of $4.5m for bad debt, as the firm says it has not been very focussed up until now, in terms of staff numbers, on the collection of debts; although not all of this amount will necessarily be written off. The company reports a cash improvement to $30.8m at the end of the quarter from $10.7m at the start, which it puts down to aggressive cash management. The balance sheet is now seen as strong enough to support Ask’s growth and there is no talk of further equity financing. Research and development is now an important focus and takes up about 14% of revenue with engineers being recruited at the moment. Ask says that the majority of its markets are doing well, namely the UK, Australia, Continental Europe and the Asia Pacific region and that only North America is a problematic area; perhaps underestimating the importance of the US market alone. Its problems are not the result of poor technology, it adds. It says hopefully that looking forward it now has a conservative business plan in place, with a knowledge of what it can achieve and predicts a positive upward trend.

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