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October 5, 1998

MICROWARE SAYS LOSSES WILL EXTEND THROUGH Q2

By CBR Staff Writer

Microware Systems Corp, the Des Moines, Iowa-based real-time operating systems company, has pre-announced the results of its poor second quarter which it says will show declining revenues and a substantial operating loss. The shares fell 17% on a turbulent Nasdaq to close at a 52-week low of $2.50. Revenues for the three months through September are expected to be $4.1m, down marginally on last year, and down 27% sequentially. Operating losses will reach $2.7m, making this the eighth consecutive quarter of losses for Microware who blamed the shortfall on a failure to close deals with some larger existing clients. Chief financial officer, George Leonard, said one of Microware’s larger, unnamed clients was undergoing a restructuring which precluded the closure of outstanding deals. Microware has a potentially huge contract with Motorola Inc, to supply the operating system for the chip giant’s new set top box cum home entertainment device, code-named Blackbird. But Leonard said no income was expected to materialize from this deal until calendar 1999, and even then he said there was currently no firm idea about how much the contract would be worth. Last month Microware announced that it would be laying off around 10% of its 175 employees, as well as re-aligning its business structure. Cash outflows from operations last quarter reached nearly $2m, but Microware holds around $11m in cash and equivalents and Leonard insisted his company had no liquidity problems.

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