Emblaze warns of second-half revenue plunge and announces pay cuts

Company blames delayed contracts on market-wide cuts in telecom expenses
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Emblaze (LSE:BLZ) managed to meet its guidance for the third quarter despite the global recession, but today it issued an earnings warning financing round the fourth quarter and pay cuts.

The provider of mobile multimedia solutions for wireless blamed the slump in results largely on the September 11 attacks on the United States. Emblaze stock opened Monday trade in London with a dive of 14%.

In mid-September Dresdner Bank estimated that Emblaze would post revenues of $58 million for 2001, up 90% from 2000. The bank estimated that Emblaze would lose 17 cents per share, or $23 million, for 2000.

Analysts are generally bullish about the Israeli company. Most price targets set for Emblaze far exceed its London trading price. Unimpressed investors sent the share tumbling by 70% tumble, of which about half was lost in the last month alone.

Having traded at £36 in early 2000 the share is now going for £1.9.

Emblaze founding partner and CEO, Eli Reifman, told TheMarker the company¿s field research and projects are still going full speed. The problem leading to the fourth-quarter earnings warning was difficulty in finalizing contracts. But no contracts have been cancelled, he added. Also, Emblaze expects to sign all the postponed contracts in the first half of 2002.

The company's faith in its market is evident from its repurchasing of stock and intention to continue recruiting people ahead of an expected telecoms rally in late 2002 and early 2003, Reifman said.

Emblaze is in no difficulty, Reifman added, with $350 million cash in hand raised in a private placement in early 2000. But the company is keeping its spending tight in any case, hence the 12% cut in executive salaries and a 5% reduction of all other wages announced today.

The company, which doubled its workforce during 2001 from 200 to 400 workers, is planning to recruit another 100 throughout the next year.

Reifman and the other Emblaze founders, Tzur Daboosh, Naftali Shani and Sharon Carmel, were unscathed by the executive pay cuts. Exercising foresight, they sold a handsome block of shares to institutional investors back in 2000, pocketing $35 million each.