SR Telecom's supply-chain problems should be over soon, CEO says

Filed in archive News on August 14, 2006

The new president of SR Telecom Inc., a maker of mobile technology for broadband networks, says the company's supply-chain problems will soon be over and deliveries will be back on schedule by the end of the year.

"Over the past year, SR Telecom has gone through a successful restructuring process that has re-established the company's financial footing and repositioned us as a leading player in the broadband wireless market," Serge Fortin told a conference call Friday.

According to Canada.com, Fortin said SR Telecom has negotiated $50 million in emergency credit, converted $73 million in debentures into equity and raised $54 million in new equity though private placements.

"Extensive cost-saving initiatives were also put in place to align our cost structure to our revenue potential. Unprofitable product lines and business units were discontinued. Supplier credit was restored and the supply chain began getting momentum."

Fortin's comments came after Montreal-based SR Telecom announced it narrowed its second-quarter losses on higher revenues as the company moved to fix supply problems at its contract manufacturers.

Its net loss improved to $17.3 million or two cents a share in the three months ended June 30 from a loss of $30.7 million or $1.54 per share a year earlier.

Revenues rose 36 per cent to $19.4 million from $14.3 million.

But Fortin said revenue and gross margins were lower than anticipated because product shipments were delayed by problems in the transition from in-house manufacturing to contract manufacturers.

Fortin, who became CEO last month to continue a 30-year telecommunications career that included spells with Bell Canada and Teleglobe Canada, defended the outsourcing problems in the second quarter as a "temporary setback."

"The decision to outsource manufacturing was the right one and it remains a vital component of our business plan," he said.

"We have adopted a comprehensive plan to resolve the issues and are working closely with our partners to improve the company's processes and fully re-establish the supply chain. We expect deliveries will be back on schedule during the fourth quarter."