Speech recognition software house Dragon Systems Inc has decided to delay its initial public offering until next month in the wake of some disappointing fourth-quarter results. The Newton, Massachusetts-based company, which was expected to go ahead with its long-awaited IPO this week, is apparently looking to buy some time for investors to digest the bad news.
In a filing with the Securities and Exchange Commission, Dragon reported that sales for the fourth quarter – its most important and seasonally the strongest sales period – that rose only 5.3% from the third quarter to $21.8m. By contrast, sales for last year’s fourth quarter were more than double that of the third. The bottom line was even worse, however, as net income fell to $1.6m from $7.6m in the third quarter. For the full year, Dragon booked revenue of $71.4m, up 166% from 1997 revenue of $26.8m. Net income for the year was $10.3m, against a loss of $5.3m.
In an announcement that could be seen as the company’s first effort in rebuilding investor confidence ahead of the delayed IPO, Dragon said Monday that it has struck a marketing deal with Dell Computer Corp. The agreement will see the PC maker provide Dragon’s NaturallySpeaking product as a core product offering in its home, business, and preferred accounts divisions. Upon customer request, Dell will pre-install the NaturallySpeaking Preferred edition as a ReadyWare software option. Dell will also promote the software through advertising in multiple catalogs, on its web page, and with direct offers to its customers. No further details of the agreement were disclosed.
