Bellevue, WA--April 27, 2000--Bsquare Corp. reported the demand for development of intelligent computing devices (ICDs) helped boost revenue. For its first quarter ended March 31, 2000, revenue totaled $13.3 million compared to $9.2 million in the like quarter a year ago.
Excluding one-time acquisition charges, net income for the quarter was $1.5 million, or $.04 per diluted share. Including the one-time acquisition charge of $620,000, the company earned $995,000, or $.03 per diluted share, compared to the like quarter of $429,000, or $.02 per share.
On January 5, 2000, the company merged with Bluewater Systems, a creator of software development tool kits for Windows-based ICDs. Results for the quarter include the acquisition of Bluewater Systems, which was completed in January 2000, and accounted for as a pooling of interest. In connection with the merger, the company incurred a $620,000 pre-tax, merger-related expense in the quarter. The charge was primarily for investment banking, accounting and legal fees.
Included in operating expenses are non-cash charges for depreciation and amortization of deferred stock option compensation of $775,000 in 2000 and $664,000 in 1999. Excluding these non-cash charges and the one time merger related costs, diluted earnings per share would have been $0.06 in 2000 and $0.04 for 1999.
"During the quarter, we signed several contracts for development and testing projects for semiconductor manufacturers and OEMs, which leads to current and future revenue growth. The demand for software in Windows-based intelligent computing devices is escalating, and these contracts are a direct reflection of the growth in this market," said William Baxter, president and CEO of Bsquare. "Additionally, Bsquare's product revenue grew 67% when compared with the prior year's same quarter."
New contracts signed by Bsquare during the quarter included a number of service contracts with Matsushita Electric Industrial Co. (MEI) - including a significant contract for which Bsquare will assist MEI with the integration of Windows CE into its microprocessors. As anticipated, following the designation in January 2000 as the exclusive Porting Partner for Windows CE, Bsqaure is now signing deals directly with semiconductor vendors. As a result, the company said, its revenue stream became more diversified in the most recent quarter to include more product, original equipment manufacturers (OEMs), and semiconductor vendor revenues. Of total revenue this quarter, 77% was from Microsoft, compared to 84% in 1999.
Also during the quarter, the company entered into strategic partnerships with Insignia, WRQ and Mobile Computing Corp. (MCC) to help those companies distribute their respective products for Windows powered ICDs. The company will distribute Insignia's Jeode Java solution, which provides an efficient means for executing Java applications. Bsquare will provide secure wireless communication between WRQ's devices and servers, and MCC's wireless router that transmits data between CE devices to Windows servers.
"In forming these partnerships, we can offer a more complete line of products and services to our customers that assist them with their development needs. The use of and demand for intelligent computing devices, we believe, is still in its infancy. We are excited about the in-roads we have made with leading OEMs and semiconductor makers; our reputation as a complete solutions provider to the ICD development market is building. We are currently forming new alliances, and look forward to announcing those partnerships and contracts in the near future," continued Baxter.
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