US-based IT services and computer systems provider CSP (NASDAQ: CSPI) swung to a profit in the fourth quarter as the company benefitted from improved sales in the service and systems integration unit and royalties from a customer contract.
Despite this, however, the company's expectations for the new year are less than encouraging.
For the fourth quarter ending September 30, 2010, the company's net profit was $46,000 or $0.01 per share, compared with a net loss of $3.6 million, or $1.02 per share, in the same period a year earlier. Net loss in 2009 included a $3.9 million non-cash charge, the company said.
Total sales during the period jumped 32% to $23.9 million year-over-year, driven by a 42% increase in revenue at the company's service and systems integration business, which includes computer maintenance and integration services, and third-party computer hardware and software reseller businesses of CSP's subsidiary, Modcomp.
"The substantial year-over-year growth in our Service and Systems Integration segment in the fourth quarter was the result of strength at both our U.S.-based Systems and Solutions division as well as at the segment's German subsidiary," said chairman and CEO Alexander R. Lupinetti.
However, Lupinetti added that CSP is expecting a significant reduction in sales volume in fiscal 2011 from one of its largest customers, a hosting company that provides outsourcing of computer infrastructure, storage and communications resources.
As a result, the company was down more than 18% on Tuesday, trading at $3.97 as of 11:00am EST.
"Looking forward, while reduced sales from our large hosting customer will most likely result in lower revenues for CSP overall in fiscal 2011 than in fiscal 2010, we are optimistic about positive trends we're seeing on both sides of our business," said Lupinetti.
For full year fiscal 2010, sales increased 14% to $95 million year-over-year, while net income was $914,000, or $0.26 per diluted share, compared with a net loss of $3.8 million, or $1.05 per share, for fiscal 2009.
At year-end, the company's cash and short term investments stood at $15.5 million.
CSP operates in two segments: Systems and the Service and System Integration units. The Systems segment consists primarily of CSP's MultiComputer Division, which designs and manufactures specialty, high-performance computer signal processing systems for the aerospace and defense markets.