Cdc Corp. (MM) (NASDAQ:CHINA)
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CDC Software, a wholly owned subsidiary of CDC Corporation, (NASDAQ:
CHINA) and a leading provider of industry-specific enterprise software
applications and business services, today announced preliminary revenue
results for the first quarter of 2008.
CDC Software expects total revenues for the first quarter of 2008 to be
between US$84.6 million and US$85.6 million, which would be a first
quarter record for the company and an increase of approximately 12
percent from US$76.2 million in the first quarter of 2007. Software
license revenues are expected to be approximately US$12.0 million which
would represent a decrease of 15.5 percent from US$14.2 million in the
first quarter of 2007.
"We are pleased to begin 2008 with our best-ever first quarter revenue
in the history of CDC Software,” said Eric
Musser, president and CEO of CDC Software. The first quarter is
typically the weakest quarter seasonally in the software industry and in
spite of the slowing economy which has impacted our new license sales
and the software industry overall, our overall results reflect the
strength of our installed base of over 6,000 customers globally. Our
revenues from maintenance, services and software sales to our existing
customers were virtually on par with our original budget for the
quarter. We believe that these recurring revenues and increasing
cross-selling opportunities with acquired products will help keep us in
a very healthy position as companies postpone new software purchases but
continue to invest in software and services related to their existing
systems. To address this continuing demand from our exiting customers,
we are in the process of launching major upgrades and additional product
modules for our primary product lines including Pivotal CRM, Saratoga
CRM and Ross Enterprise. We believe these enhancements and new add-on
products will drive increases in upgrades within our installed base of
customers will help spur our consulting services and software deployment
expansions.
“In addition to our focus on leveraging the
full potential of our installed base of customers, we are also taking
steps to preserve and improve our bottom-line profits. We are very
pleased with our continuing progress in streamlining our global research
and development function through the expansion of our highly
cost-effective centers in China and India. This shift is enabling us to
expand and accelerate the development of strategic products while we
keep our overall development costs at targeted levels. Last fall, we
enacted cost reduction initiatives that reduced annual operating
expenses by approximately US$7.5 million. We recently completed another
round of consolidation to further improve efficiency by eliminating
duplicate functions among our various acquired companies. These moves
have resulted in additional annualized cost savings of approximately
US$8.8 million. With our lower cost base and the strength of our
6,000-plus global customer base, I believe CDC Software is in the best
position ever in company history to continue our growth strategy, and
continue to see improvements in operating margins over the next few
years.”
CDC Software has also been aggressively expanding its operations in
China. Most recently, CDC Software entered a binding agreement to
acquire a stake in Tenly Software, one of China’s
leading providers of business intelligence solutions. Tenly’s
flagship product, Markway Analysis System, is being used widely
throughout the national government and ministry in China. Markway
Analysis System has been certified by the Chinese Statistics Association
as the national standard of statistical analysis and data mining
platform, and it has been adopted by China’s
National Bureau of Statistics as the official analytics tool and
recommended for use nationwide. It is also used by the Chinese Ministry
of Education as the designated software for national testing and NIT
certification examinations and has been adopted by the National
Evaluation Center of Information Technologies as the designated software
for data analysis in the Fortune 500 companies of China.
Last month, CDC Software also acquired a majority stake in Integrated
Solutions Limited (ISL), a Hong Kong-based vendor of ERP systems that
mirrors CDC Software’s focus and success as a
vertical industry specialist. The company provides complete ERP
solutions designed to address the needs of small and medium-sized
discrete manufacturers in the electronics, toy, watch and furniture
industries in China. ISL has more than 150 customers in southern China,
including Ansen Electronics, Artfield Manufacturing, Verint Systems,
Unilux Time, and Kendy Enterprise. CDC Software has already successfully
completed a joint sale including the ISL discrete ERP system and CDC
Software’s Platinum HRM system for China.
In the Fall of 2007, CDC Software agreed to form a joint venture with
FlexSystem Limited, one of the leading enterprise software solution
providers in China. CDC Software intends that the joint venture will
develop human resources, payroll and accounting software as a service
(SaaS) applications for initial deployment throughout China, and that
these applications will be marketed and sold directly by CDC Software
and offered on a subscription basis with very low up-front costs.
“China is recognized as the largest
manufacturing market in the world and one of the world’s
largest and most rapidly growing markets for enterprise software,”
said Peter Yip, executive chairman of CDC Software. “We
are leveraging our established presence and experience in China and our
expertise in enterprise software systems for manufacturers to take
advantage of this significant growth opportunity. As we continue to grow
and maintain our competitive advantages as vertical industry specialists
in our other established geographies, such as North America and Europe,
we expect our China operation to grow even more rapidly and become an
increasingly strategic market for us.”
About CDC Corporation
The CDC family of companies includes CDC Software focused on enterprise
software applications and services, CDC Games focused on online games,
and China.com focused on portals for the greater China markets. For more
information about CDC Corporation (NASDAQ: CHINA), please visit www.cdccorporation.net.
About CDC Software
CDC Software, The Customer-Driven Company™,
is a provider of enterprise software applications designed to help
organizations deliver a superior customer experience while increasing
efficiencies and profitability. CDC Software’s
product suite includes: CDC Factory (manufacturing operations
management), Ross ERP (enterprise resource planning) and SCM (supply
chain management), CDC Supply Chain (supply chain management, warehouse
management and order management), Pivotal CRM and Saratoga CRM (customer
relationship management), CDC MarketFirst (marketing automation and lead
management), Respond (customer complaint and feedback management), c360
CRM add-on products, industry solutions and development tools for the
Microsoft Dynamics CRM platform, Platinum HRM (human resources) and
business analytics solutions.
These industry-specific solutions are used by more than 6,000 customers
worldwide within the manufacturing, financial services, health care,
home building, real estate, and wholesale and retail distribution
industries. The company completes its offerings with a full continuum of
services that span the life cycle of technology and software
applications, including implementation, project consulting, outsourced
business services, application management and offshore development. CDC
Software is the enterprise software unit of CDC Corporation (NASDAQ:
CHINA) and is ranked number 12 on the MBT 2007 Global 100 List of
Enterprise and Supply Chain Management Application vendors. For more
information, please visit www.cdcsoftware.com.
Cautionary Note Regarding Forward-Looking Statements
This press release includes "forward-looking statements" within the
meaning of the United States Private Securities Litigation Reform Act of
1995. These forward-looking statements include statements regarding our
expectations regarding revenues for CDC Software for the first quarter
of 2008 as well as the components and composition of such revenues; our
beliefs regarding the strength of our installed base customers and
sales; our beliefs regarding customer preferences; our beliefs regarding
recurring installed base revenues and increased cross-selling
opportunities with acquired products sustaining our financial and
business position; our beliefs regarding our position and ability to
continue our growth strategy and continue to see improvements in
operating margins over the next few years; our ability to successfully
launch major upgrades and additional modules for our products and our
beliefs that these will drive increases in upgrades among our installed
base customers and spur growth in our consulting services and
development expansions; our beliefs regarding our past and present cost
savings initiatives, including restructurings and headcount reductions,
and the effects thereof, including effects on out financial performance
and profit margins; our expectations regarding our continued expansion
in China; our intentions regarding our joint venture with FlexSystems
and the products and strategies that may be pursued thereby; our ability
to leverage our established presence and experience in China in order to
grow and expand in the future; our expectations regarding the growth and
expansion of the Chinese market; and other statements that are not
historical fact, the achievement of which involve risks, uncertainties
and assumptions. If any such risks or uncertainties materialize or if
any of the assumptions proves incorrect, our results could differ
materially from the results expressed or implied by the forward-looking
statements we make. These statements are based on management's current
expectations and are subject to risks and uncertainties and changes in
circumstances. There are important factors that could cause actual
results to differ materially from those anticipated in the forward
looking statements, including the following: (a) the ability to realize
strategic objectives by taking advantage of market opportunities in
targeted geographic markets; (b) the ability to make changes in business
strategy, development plans and product offerings to respond to the
needs of current, new and potential customers, suppliers and strategic
partners; (c) the effects of restructurings and rationalization of
operations; (d) the ability to address technological changes and
developments including the development and enhancement of products; (e)
the entry of new competitors and their technological advances; (f) the
need to develop, integrate and deploy enterprise software applications
to meet customer's requirements; (g) the possibility of development or
deployment difficulties or delays; (h) the dependence on customer
satisfaction with the company's software products and services; (i)
continued commitment to the deployment of the enterprise software
solutions; (j) risks involved in developing software solutions and
integrating them with third-party software and services; (k) the
continued ability of the company's enterprise software solutions to
address client-specific requirements; (l) demand for and market
acceptance of new and existing enterprise software and services and the
positioning of the company's solutions; (m) the ability of staff to
operate the enterprise software and extract and utilize information from
the company's enterprise software solutions; (n) the continued
cooperation of our strategic and business partners; (o) risks relating
to economic conditions and other matters beyond our control; (p) the
risk that the preliminary financial results provided herein could differ
from our actual results of operations and financial condition; and (q)
the continued strength of revenues from our installed base customers..
Further information on risks or other factors that could cause results
to differ is detailed in filings or submissions with the United States
Securities and Exchange Commission made by CDC Corporation in its Annual
Report for the year ended December 31, 2006 on Form 20-F filed on July
2, 2007. All forward-looking statements included in this press release
are based upon information available to management as of the date of the
press release, and you are cautioned not to place undue reliance on any
forward looking statements which speak only as of the date of this press
release. The company assumes no obligation to update or alter the
forward looking statements whether as a result of new information,
future events or otherwise.