TORONTO (CP) - Network-testing technology firm Exfo-Electro-Optical Engineering Inc. (TSX:EXF.SV) will use a recent acquisition to increase its share of the broadband access market as it aims for 15 per cent sales growth in 2006, its CEO told shareholders Wednesday.
Last week's acquisition of privately held Consultronics Ltd. will allow the Quebec City-based company to reach new customers and address changes in the industry, CEO Germain Lamonde told the firm's annual meeting in Toronto.
"The product offering of Consultronics - combined with the one of Exfo - makes it a very strong one-stop shop in the specific segment of the access network, which is the last leg of networks connecting to the homes and home businesses," Lamonde said.
"Exfo was very, very strong in the optical testing, but (was) lacking (in) the last segment" for certain customers, he said.
Exfo is buying Consultronics for $22.8 million in a cash deal scheduled to close in mid-March.
The company said it plans to increase sales in 2006 by 15 per cent year-over-year through market-share gains, maximize profitability by five per cent and bring in 40 per cent of its sales from new products.
"What Consultronics is going to do is to get them into copper, DSL testing and some other VoIP and IP-TV testing," said Paras Bhargava, an analyst with BMO Nesbitt Burns.
"It gives Exfo something to sell that (major competitor) Acterna already had to sell."
What remains to be seen, he added, was whether Exfo's salesforce succeeds at increasing revenues for Consultronics.
Lamonde said Exfo met its sales and profitability goals for 2005, with new-product sales coming in at 42.4 per cent on a 45 per cent goal. The company is expected to announce a new line of products in the coming weeks.
"There are some very important products on the protocol testing side ... a segment we believe will be a very important part of our growth," Lamonde said in an interview after the meeting.
"There were some key milestones in terms of products that we're still having a small hole for, and we're going to fill that requirement very shortly."
Exfo reported Tuesday a profit of $355,000 US, or a penny per diluted share, for the first quarter ended Nov. 30, compared with a loss of $2.4 million US, or three cents per share, for the same period last year.
Sales, reported in U.S. currency, grew by 25.2 per cent to $27 million from $21.6 million, the company said Tuesday.
"Despite the fact that the Canadian currency has significantly evolved in the last 12 months of fiscal '05, I'm very glad to report that our gross margins haven't been impacted," Lamonde told shareholders Wednesday.
"In fact, we have still been able to expand gross margin despite significant negative impact of the currency itself."
Sales for the coming second quarter are expected to come in between $26 million and $29 million US , with earnings between a loss of a penny per diluted share and profit of two cents per diluted share.
Exfo designs and makes testing for telecom network service providers and cable TV operators in 70 countries.
On the Toronto Stock Exchange on Wednesday, its shares were trading up 29 cents, 5.27 per cent, at $5.79.
http://news.yahoo.com/s/cpress/20060111/ca_pr_on_tc/exfo_electro_2
Last week's acquisition of privately held Consultronics Ltd. will allow the Quebec City-based company to reach new customers and address changes in the industry, CEO Germain Lamonde told the firm's annual meeting in Toronto.
"The product offering of Consultronics - combined with the one of Exfo - makes it a very strong one-stop shop in the specific segment of the access network, which is the last leg of networks connecting to the homes and home businesses," Lamonde said.
"Exfo was very, very strong in the optical testing, but (was) lacking (in) the last segment" for certain customers, he said.
Exfo is buying Consultronics for $22.8 million in a cash deal scheduled to close in mid-March.
The company said it plans to increase sales in 2006 by 15 per cent year-over-year through market-share gains, maximize profitability by five per cent and bring in 40 per cent of its sales from new products.
"What Consultronics is going to do is to get them into copper, DSL testing and some other VoIP and IP-TV testing," said Paras Bhargava, an analyst with BMO Nesbitt Burns.
"It gives Exfo something to sell that (major competitor) Acterna already had to sell."
What remains to be seen, he added, was whether Exfo's salesforce succeeds at increasing revenues for Consultronics.
Lamonde said Exfo met its sales and profitability goals for 2005, with new-product sales coming in at 42.4 per cent on a 45 per cent goal. The company is expected to announce a new line of products in the coming weeks.
"There are some very important products on the protocol testing side ... a segment we believe will be a very important part of our growth," Lamonde said in an interview after the meeting.
"There were some key milestones in terms of products that we're still having a small hole for, and we're going to fill that requirement very shortly."
Exfo reported Tuesday a profit of $355,000 US, or a penny per diluted share, for the first quarter ended Nov. 30, compared with a loss of $2.4 million US, or three cents per share, for the same period last year.
Sales, reported in U.S. currency, grew by 25.2 per cent to $27 million from $21.6 million, the company said Tuesday.
"Despite the fact that the Canadian currency has significantly evolved in the last 12 months of fiscal '05, I'm very glad to report that our gross margins haven't been impacted," Lamonde told shareholders Wednesday.
"In fact, we have still been able to expand gross margin despite significant negative impact of the currency itself."
Sales for the coming second quarter are expected to come in between $26 million and $29 million US , with earnings between a loss of a penny per diluted share and profit of two cents per diluted share.
Exfo designs and makes testing for telecom network service providers and cable TV operators in 70 countries.
On the Toronto Stock Exchange on Wednesday, its shares were trading up 29 cents, 5.27 per cent, at $5.79.
http://news.yahoo.com/s/cpress/20060111/ca_pr_on_tc/exfo_electro_2
