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February 16, 1999


By CBR Staff Writer

Geac Computer Corp reported preliminary results for its third quarter that fell short of analysts’ expectations. The Canadian provider of software and services for various vertical markets said Tuesday that revenues for the quarter were approximately $214m, compared to $174.2m in the year-ago period. At that level, net income for the quarter should be in the range of $34m to $37m ($0.55 to $0.60 per share) – compared to $44.8m, or $0.75 per share reported in the same quarter last year. The revenue increase was largely due to recent acquisition activity, with acquisitions completed since January 31 contributing roughly $35m to the top line in the quarter. Excluding acquisitions, license revenues and related services remained flat compared to the same period in the prior year. Maintenance revenues, excluding acquisitions, rose by $5m year-over-year. The company blames the trouble on costs related to Y2K which are now expected to continue for several more quarters and are being expensed as incurred. Geac says it is incurring the extra cost to provide easier upgrade paths for customers and to maintain the strong customer relationships vital for future maintenance revenues. It also says that the weak software license sales environment seen in the third quarter is likely to remain more or less the same for up to 12 months. The company insists, however, that it is generating strong cash flows and that it is well-positioned for future acquisitions. Cash balances as of January 31 were roughly $230m. Final results for the quarter will be reported March 9.

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