Software company

Crystal Systems Solutions

(Nasdaq:CRYS) posted net losses loss of $2.2 million and revenues of $11 million for the first quarter of 2001.

The figures are in line with the company's lowered guidance, announced at the beginning of April.

Crystal develops software tools to convert projects, mainly by mainframe computer systems. It is a member of the

Formula

(Nasdaq:FORTY) group.

Aggregate losses came to $3.4 million or 34 cents per share, compared with a profit of $1.2 million or 12 cents per share in the first quarter of 2000.

Revenues in the fourth quarter of 2000 came to $12.6 million, similar to the original forecast for the first quarter of 2001. Earnings came to some $700,000.

The company restructured in the first quarter this year, expenses increasing accordingly. One-time expenses came to $1.7 million, of which $870,000 was spent on restructuring.

The restructuring measures involved business consolidation and the relocating of subsidiaries near to Crystal's headquarters in Herzliya, Israel.

Crystal CFO Iris Yahal says that there have been no special staff cutbacks at the company of late, and that the company doesn't intend to do so in the foreseeable future.

The company attributes the disappointing results to the uncertainty in the market in North America, where leading software companies slashed their purchasing budgets.

Crystal subsidiary Mainsoft Corporation (61%) was the most to suffer from the American slump. Several big customers put off orders. In addition, the volume of some orders declined.

Mainsoft's technology enables building applications simultaneously on various kinds of computers or platforms, but the development is done on a single platform.

Mainsoft is Crystal's main revenues engine, accounting for 40% of revenues in the fourth quarter of 2000. But in the first quarter this year, Mainsoft's share in aggregate revenues dropped to a third.

Yahal says that's very much the difference between the original forecasts and the actual results for the quarter. Apparently, it was one deal for some $1 million cancelled in the beginning of April, which slashed both revenues and profit.

"In order to meet the challenges of the new economic environment, the company has characterized the revised needs of its potential customers, and is adjusting its business model," Crystal Chairman and Acting CEO Gad Goldstein said.

"Crystal has started during the first quarter to implement a strategic initiative to better position the Company towards those market needs. According to the plan, Crystal is consolidating its business lines and restructuring its workforce. These proactive measures are executed with the objective of sequential quarterly improvements in the Company's financial results," Goldstein added.

Crystal will provide another forecast in 10 days.

Despite the current results, investors did not seem too disappointed as shares closed unchanged at $5 on May 16. But the shares have strongly eroded this quarter. In January, Crystal shares were selling for $9.

The company's current market cap is $50 million, a quarter of its peak price in early 2000.