Luster Is Gone, but Hope Isnt

 
 
By eweek  |  Posted 2001-05-07 Email Print this article Print
 
 
 
 
 
 
 

ASP pioneer FutureLink thinks it may take five years for market to mature.

If he could bottle and sell some of his enthusiasm, FutureLink president and CEO Howard Taylor would have an unstoppable stream of revenue. But for Taylor, that is not the case.

Even as FutureLinks SEC filings warn investors about the application service providers "uncertainty," Taylor remains confident the recently reorganized company will land on its feet. "Im not giving up," says Taylor. "I think its only a matter of time."

However, its most recent financial statements do not paint a pretty picture. The company lost $286.5 million last year, with $205 million in Q4 losses alone. It also reported EBITDA (earnings before interest, taxes, depreciation and amortization) of negative $15.4 million for Q4, and EBITDA of negative $45.8 million for the year.

Meanwhile, Nasdaq has given the company a June 25 deadline to regain compliance or face delisting because its shares did not trade above $1 for 30 consecutive days.On the upside, Taylor predicts FutureLink will break even by year-end.

While its Web site still shows an electrical switch, meant to illustrate FutureLinks role as "the application utility company," FutureLink no longer wants to be known solely as an ASP. Even though the company was one of the ASP pioneers, its ASP-related work accounted for only 4 percent of its revenue last year.

Taylor realizes the luster has faded from the ASP moniker. These days hes focusing on the companys professional-services capabilities. "We balanced our focus, if anything," he says.

"[We are] truly getting the company to focus on delivering information technology the way customers want it versus trying to dictate the shrink-wrapped mode they have to deploy," Taylor says.

The company recently appointed Eugene Froelich as its executive VP and CFO, replacing Rick White, who is returning to his prior position as senior VP of corporate administration.

It also entered into an amended agreement to become compliant with loan covenants it has with Foothill Capital Corp. The deal means FutureLink can borrow up to $15 million, based on raising $10 million in additional debt or equity by June 30. Also, Pequot Private Equity invested $3.5 million and committed to $1.5 million by May 31.

Taylor does not shy away from admitting some mistakes, particularly in believing the ASP market would surge last year. Now he figures the growth will come slower, maybe in five years.

"I think the issue comes down to the fact that we made … projections and estimates and assumptions as to where the ASP industry was going to be, and we were wrong," says Taylor. "We will be positioned, when the growth does come, to take advantage."

 
 
 
 
 
 
 
 
 
 
 

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