STOCKHOLM, Sweden, April 25, 2002 (PRIMEZONE) -- Aspiro AB (publ):
-- Net sales amounted to SEK 10.5 m (SEK 12.5 m). -- The result after financial items amounted to SEK -29.8 m (SEK -31.8 m). -- The company's liquid funds amounted to SEK 60.6 m (SEK 108.1 m) at the end of the period. -- Aspiro signed 11 new sales agreements with customers in Europe and the U.S.A during the period. A further three agreements have been signed as of April 24. -- Market demand for Aspiro's SMS Network rose in the first quarter. In March, Aspiro processed 13.8 million SMS messages, to be compared with a monthly average of 7.2 million in 2001. -- Aspiro's client base includes ten mobile operators. -- Aspiro's MMS services were being tested by ten mobile operators at the end of the period. A further two operators have since commenced test trials. -- In March, Aspiro took the decision to continue its strategy of focusing on consumer services and SMS traffic. The company's other business areas are to be sold and some organizational functions will be contracted out to third parties. The measures will affect 25 employees out of a current workforce of 67. The results of the focusing will be accounted for beginning the second quarter. -- Hakan Persson will take over as CEO of Aspiro on May 6. -- After the end of the period, Aspiro has signed a license agreement with a European 3G operator.
Net sales and result
The Group's net sales in the first quarter amounted to SEK 10.5 m (SEK 12.5 m); an increase of 21% compared to the fourth quarter of 2001. Of total net sales, 13 % are attributable to sales in Sweden, 70 % in the rest of Europe, and 17% in non-European countries.
The result after financial items amounted to SEK -29.8 m (SEK -31.8 m). The period's result has been affected by restructuring costs totaling SEK 3.1 m (the comparative period included SEK 2.9 m which represented a dissolvation of provisions for restructuring costs). Consequently, the operative result improved by SEK 8 m. First-quarter results were also affected by one-off costs such as consultancy fees and more expensive SMS message processing arising from a change of provider. The increase in personnel costs during the first quarter compared with last year's fourth quarter is attributable to the inclusion of Mgage Systems AB as a part of the Group at the beginning of this year.
The results of the focusing and restructuring measures currently underway will be presented beginning the second quarter.
Earnings per share amounted to SEK -0.35 (SEK -0.46). Outstanding option rights involve no dilution of the company's stock.
Parent Company
The Parent Company's net sales during the period amounted to SEK 8.8 m (SEK 11.0 m) yielding a result after financial items of SEK -22.5 m (SEK -26.6 m).
Investments
Group investments in tangible assets during the period amounted to SEK 0.2 m (SEK 5.8 m). Of total investments, SEK 0.02 m (SEK 1.2 m) related to finance leasing agreements.
Liquidity
Liquid assets amounted to SEK 60.6 m (SEK 108.1 m) at the end of the period.
Aspiro's stock
Aspiro's stock is listed on Stockholmsborsen's O-list.
The number of outstanding shares at the end of the period amounted to 86,037,811. If all outstanding option rights are exercised to subscribe for shares, the number of additional shares will amount to 1,015,750, each with a nominal value of SEK 0.02.
The Market
The demand for Aspiro's SMS network services increased during the first quarter of 2002. In March, Aspiro processed 13.8 million SMS messages. This is almost a one hundred percent rise in volume compared to 2001 when Aspiro processed a monthly average of 7.2 million messages. The steep rise can be explained by Aspiro's new customer focus and an improvement to the technological capacity of the SMS switch. Aspiro's SMS switch customers are mainly companies aiming to reach specific target groups such as Internet Service Providers and media corporations. The increase in high SMS volume growth is expected to continue.
The market for mobile consumer services remains uncertain. One the one hand, development is being hampered by the fact that many mobile operators are being forced to implement cost-savings after mergers and revenue shortfalls in 2001. On the other, increasing competition to attract mobile users indicates a strong services market. Over the next few years mobile operators are expected to increase their marketing efforts in order to retain customer loyalty, particularly through the use of new mobile services.
Many European mobile operators today offer mobile services from external providers. They have moved away from developing and marketing services internally, something which previously was the market standard. To increase the attraction of their services among existing and potential subscribers, operators are now choosing to elicit the help of strong brand names and specialists in the field of mobile consumer services. Aspiro therefore intends to develop services for companies with strong brand names. This will provide an attractive range of services to distribute to Aspiro's operator customers, which currently number ten.
Mobile operators are also demanding mobile services packet solutions principally aimed at young people. Which is why Aspiro offers solutions customized to target groups that include services and marketing that are continually updated. One example is Aspiro's concept for young people over 18 years of age currently offered through AT&T Wireless (USA) portal mModesm.
Sales
Aspiro signed 11 sales agreements during the first quarter of the year.
SMS traffic processing rose steeply during the latter half of the period. In total, Aspiro processed 29.2 million SMS messages, including 13.8 million in March. Net sales for the first quarter were dominated by Aspiro's SMS traffic. Aspiro also signed seven new agreements involving SMS traffic.
Aspiro signed a sales agreement with Sunrise, a Swiss operator, for 21 mobile consumer services. Aspiro has now sold mobile services to ten operators to date, including Telecom Italia (Italy), Voicestream (USA), D2 Vodafone (Germany) and Microcell i5 (Canada).
At the end of the period, Aspiro's MMS services were being tested by ten operators around the world, including T-Mobil (Germany) and Sunrise (Switzerland).
The distribution agreement with Ericsson remains strategically important for Aspiro's sales results. During the period it generated further sales agreements and trial orders.
Personnel and organization
At the end of the period, the total number of persons employed by Aspiro was 67 distributed across 60.5 full-time positions.
Aspiro decided in March to continue its strategy of focusing on consumer services and SMS traffic and to sell its Corporate Services (Fleet Manager) and Mobile TextPhone business areas. Some functions within the company are also to be contracted out to third parties, e.g. the operation of applications and SMS processing, and Aspiro's internal IT support. The measures will affect 25 of the current workforce of 67 employees. Aspiro expects to achieve annual savings of around SEK 10-15 million whilst experiencing only a marginal drop in revenues.
The decision allows Aspiro to free management resources, concentrate on its core business activities, and make the company more efficient. All future company focus will be on the business areas Consumer Services and SMS traffic processing management (Community Services) based on the company's technology platform (Technology).
Future outlook
The volume increase in processed SMS traffic during the latter part of the first quarter is expected to remain long term as a result of Aspiro's new customer focus and greater efficiency.
The mobile consumer services market is currently dominated by SMS-based services such as icons and ring tones. These types of services are expected to develop strongly with the introduction of color images and messages using MMS technology. The pace of development however is largely dependent upon operators' capacity to invest in marketing and the commercial availability of MMS handsets. The great interest shown by operators in MMS services like Aspiro's My Photo Gallery as well as the similarities of MMS services with those of SMS will most probably help push such color services into general use by the end of 2002. However, Aspiro does not expect to benefit from any major revenues from color services in its results for 2002.
Aspiro's broad operator base represents an important foundation now that the company begins its sales activities directed at companies with strong brands. The goal is to develop attractive services linked to brand names that can be distributed to mobile users through Aspiro's operator base.
Aspiro intends to play a continuous and active role in the consolidation process which is currently underway in the mobile sector.
Events after the end of the period
After the end of the period, Aspiro announced that Lena Wittbjer had requested to resign as CEO of the company. Aspiro has appointed Hakan Persson, previously head of AU System's Operator business area, as the new CEO. Mr. Persson, who takes over officially on May 6, has gained extensive experience of business development and marketing in the telecommunications industry and mobile Internet through holding several positions at Telia, BT and IBM. Former CEO, Lena Wittbjer, will remain at the service of the board of directors until mid-year.
Aspiro launched five mobile community services under the joint name Temptation Zone on April 23 via AT&T Wireless' portal mModesm in the American market. The agreement with AT&T Wireless, who have 19 million subscribers, will initially run for one year.
On April 24, Aspiro signed a license agreement with a European 3G operator involving four services. The agreement initially runs for one year.
Aspiro's collaboration agreement with Ericsson has generated two additional trial orders from European operators for its MMS services.
A new sales agreement for the processing of SMS traffic has been signed as of April 20.
Aspiro and production company, Jarowskij, have begun a collaboration involving the development and marketing of a mobile SMS role-playing game. The target group is companies wishing to market themselves to young consumers via mobile media. Sales activities will begin in April.
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