The revision cuts $4.6m from its third-quarter revenue to September 30, which is now $15.2m, and cuts $6.7m from its fourth-quarter figures, which are now $16.7m. Difficulties arose because India does not have a convertible currency, and Quovadx encountered problems with letters of credit issued on behalf of Infotech. It said it has now received new letters of credit and is confident the money will be collected.
Paradoxically, while Quovadx has been struggling to collect money from India, it has been paying the wages of 66 Indian developers employed by Infotech. Under agreements reached in October 2003, Infotech agreed to become an exclusive reseller of Quovadx software in India and certain African countries, and to be a general reseller worldwide. At the same time, Infotech, a consortium of major Indian IT companies, agreed a $30m offshore contracting deal with Quovadx.
To guard against similar problems in the future, Quovadx said it will only recognize revenue from Infotech when the money has been received. However, the market took a dim view of developments, and its shares slumped 31.4% to $3.45.
This article is based on material originally published by ComputerWire
