Sysdeco reports loss for '95
In what was an apparent clash of financial cultures, Sysdeco Group ASA of Norway first appeared to have made money in 1995, and then not to have made money.

The owner of Atex Publishing Systems Corp. of Bedford, Mass., and Dewar Information Systems Corp. of Downers Grove, Ill., made a preliminary announcement that its 1995 pre-tax profit was $1.5 million. Then Sysdeco corrected the figures to represent a $32.9 million after-tax loss on revenues of $63.4 million.

In addition, as the company was preparing to announce its audited 1995 results, it suspended trading of its stock on the Oslo stock exchange for four business days, April 19-24.

"These are one-off costs that have to do with cleaning up the balance sheet," Johs Jamne, the managing director and chief executive of Sysdeco, said in a late April phone call from London, where he was meeting with investors to explain the situation.

Sysdeco, a company that has had success in making software tools that assist programmers in building computer code, began moving into the publishing systems business in 1994, when it acquired ND Comtec, a bankrupt European publishing systems supplier.

In early 1995 it purchased SyPress Oy -- a Finnish supplier of editorial and classified systems -- and an interest in Atex. In September 1995, Sysdeco bought Dewar, and by the end of the year Sysdeco had acquired the majority interest in Atex.

At issue in the difference between a projected profit and an actual loss was how to account for "goodwill," a legal term that assesses the value of the name and reputation of the business.

In this case, the issue was how much of the goodwill of the names Atex, Dewar and SyPress should be written off the books immediately, and how much should be amortized over many years.

European -- and specifically Norwegian -- accounting custom is to carry this goodwill value on the books for many years. In the United States, prevailing practice is to write off all goodwill in the first year.

Sysdeco's preliminary figures set the goodwill write-off at $2.7 million; ultimately, the company wrote off $29.2 million.

In addition, the company lowered its 1995 revenue estimates by $4.4 million and raised its operating expenses by $3.3 million. Sysdeco apparently also miscalculated its salary tax liability in Norway -- $1.3 million had to be set aside for the Norwegian government.

Jamne characterized the write-offs as "the kitchen sink approach" to balance sheet maintenance.

He compared Sysdeco to a couple of other computer companies that have posted losses recently -- Apple and IBM.

"When IBM bought Lotus," Jamne said, referring to the merger of the two large computer businesses, "they wrote off half the purchase price in one quarter."

Sysdeco itself requested the halt in trading of its shares on the Oslo stock exchange. Apparently the company was concerned about issues regarding insider trading, and once it realized it would be reporting dramatically different results than the preliminary estimates, it stopped trading until the audited results could be made public.

In late '94 and early '95, Sysdeco stock was trading at about $10 a share; upon the acquisition of SyPress and Atex, the stock shot up to $33 a share. Rumors of the revised balance sheet caused the stock to drop to around $20; when trading resumed April 24, Sysdeco stock traded in the $14 range and stayed there for the rest of the week.

Sysdeco executives -- who have made no secret of their desire to become a U.S.-based company -- had been planning to start trading warrants of their Oslo stock on a U.S. stock exchange.

Jamne said that the result of the different estimates and trading halt was to say "that we aren't ready for the Nasdaq." He said it would be '97 before the company would look at listing itself on the Nasdaq.

"We need to get the right management in place," Jamne said. In its press release regarding its 1995 earnings, the company made reference to "recruiting a seasoned CFO [chief financial officer] in the U.S. to head up the Group's financial management and support operational management."

Nonetheless, Jamne was upbeat.

"The business is doing fine," he said. "My idea has been to mix Scandinavian technology with U.S. business culture. It's crucial to our success."

-- dmc

Bit bucket ...
Moving Milwaukee: At the Journal Sentinel, a number of changes have transpired, including the promotion of Geoff Blaesing. He'd been graphics editor (and before that, systems editor) and has been named senior editor for graphics and design. ... Dulcie Shoener, who had taken Blaesing's systems editor job, moves to the publishing systems department as a support specialist. ... Duane Freitag, formerly of the design desk, gets the newsroom systems job. ... John Linder, formerly of the copy desk, is named assistant systems editor. ... Also new to the publishing systems department is Jerry Kochman, formerly of the Kenosha (Wis.) News. ...

Tampa transmutation: At the Tampa Tribune, Patti Breckenridge has been named assistant managing editor for electronic publishing; previously she was AME for presentation. ... She replaces Bill Prewitt, who has been named systems editor at the Houston Chronicle. ... Also, Donna Reed has been named deputy managing editor; she'd been with the local school district for the last decade but before that had been an editor at the Trib. ...

New media mavens: At the New Century Network, the alliance of nine newspaper publishing companies (see The Cole Papers, May 1995), a chief executive was finally chosen: Lee deBoer. Formerly an executive with Home Box Office (HBO), deBoer most recently has been running his own New York City consulting firm (he doesn't have any newspaper experience). ... At the New York Times Co., Leonard Forman has been named senior vice president; he'll be responsible for corporate development, new ventures and electronic businesses. Forman formerly was with Telemundo Inc., Nynex/Newsday, the Newspaper Association of America, the Newspaper Advertising Bureau and -- the New York Times. ... At NandO.Net, the new media arm of the News & Observer of Raleigh, N.C., Chief Executive Frank Daniels III has left the company "to pursue other interests." Daniels, son of the publisher of the N&O (which was bought last year by McClatchy Newspapers), will become chairman and chief executive of Koz Inc., a developer of Internet publishing tools based in Greensboro, N.C. In addition, he will teach, consult and write a book. ...

Real bits: At the Associated Press, Tori Smith has been named acting director of corporate communications; she'd been deputy director. ... At the National Institute for Computer-Assisted Reporting, Neil Reisner has been appointed training director; he'd been database editor of The Record in Hackensack, N.J. ... At the New York Times News Service, Peggy Walsh has left as executive editor; she's started her own consulting firm in Atlanta. Taking Walsh's place is James Robison, who had been with Nytns (and before that, United Features Syndicate and The Record in Hackensack, N.J.). Also at Nytns, Peter Trigg has been named director of communications and technology for parent organization New York Times Syndication Sales Corp.; taking Trigg's place as director of photos and graphics is Deborah Marchand. ... Also at the aformentioned Record, Bob Cunningham has been named assistant managing editor for production and technology. ... And at the Asbury Park (N.J.) Press, Gary Schoening has been named managing editor for projects and technology. ...

Vendor vagaries: At Cascade Systems Inc. of Andover, Mass., Gary Muller has joined the staff; his first project will be to launch Cascade's new raster image processor. Muller had been with HighWater Designs and DuPont/ImagiTex. ... At ECRM of Tewksbury, Mass., James Frankiewicz has been named account representative for the north central sales region; Frankiewcz previously had been with Linotype-Hell and Varityper. ... Mission Critical Technologies of Concord, Mass., has made a number of appointments, including Steve Rosenfeld as sales director (he'd been with Atex), Henry Kline as southeastern sales director (he'd been with Advanced Technical Solutions and Atex), Gary Demko as Midwest sales director (he'd been with Atex), Bob Bisson in customer support (he'd been with Stream Software of Boston) and Paula Lagasse as quality assurance manager (she'd been with The Technology Group in Westford, Mass., makers of XyWrite). ... At Monotype Systems Inc. of Rolling Meadows, Ill., Mike Squires has been named district sales manager "for the territory that ranges from Texas to Saskatchewan." Previously, Squires was with Triple-I and the TelePress Division of Ricoh. ... At WeatherData Inc. of Wichita, Kan., Todd Buckley has been promoted to director of media and computer operations. Also at WeatherData, Dean Jones has been named manager of storm warnings and utilities (he's been with the company since 1992). And Wendy Moyer is now assistant manager of media services. ...

Confabs: The World Newspaper Congress and the World Editors Forum meet simultaneously May 19-22 in Washington (there's a trade show, too). Speakers include William Ardell of Canada's Southam Newspaper Group, Louis Boccardi of the AP, Ben Bradlee of the Washington Post, Doug Clifton of the Miami Herald, John Curley of Gannett and Futurist Paul Saffo. For more information, call (011) {33 1} 47 42 85 00. ... The Pre Show/Midwest and the Folio Midwest conferences will be held concurrently, May 20-23 in Chicago. For more information, call (203) 358-9900. ... Successful On-Line Publishing Strategies for Magazines and Newspapers is May 20-21 in Boston. Speakers include Bill Bass of the Boston Globe, Barry Cooper of the Orlando Sentinel, Larry Druth of the Chicago Tribune and Greg DeMaagd of the San Francisco Newspaper Agency. For details, call (617) 270-6200. ... The JavaOne Conference, so's you can learn more about the Internet's programming language, is May 29-31 in San Francisco. For information, point your browser at http://java.sun.com/javaone or call (415) 578-6990. ... Strategies for On-Line Newspapers and Magazines is May 30-31 in New York City. "Distinguished faculty" includes Fred Lebolt of the Chicago Sun-Times , Andrew Nibley of Reuters New Media, Barry Parr of the San Jose (Calif.) Mercury News and Rick Scheuerman of the Tampa (Fla.) Tribune. For more information, call (212) 661-8740. ... Don't forget the annual clambakes for newspaper technologists: Connections is June 14-15 and NEXPO is June 15-19; they're in Las Vegas. Call (703) 648-1000 for info. ...

Errors & Omissions: In a piece last month about the merger of Autologic and Information International, I misspelled two names: the new vice president for newspaper sales is Allan Cross and the new head of marketing is Dick Ritterbush. Apparently no bruised feelings at that end, but I just wanted to get it right. ... #

Newspapers will do well on the Internet "if they define themselves for what they're good at: local news, local ads and local promotion, with a friendly attitude toward technology. If they stand still, classifieds will be the first to go."
-- John Malone, founder of cable giant TCI, interviewed by the Denver Post

From THE COLE PAPERS, May 1996, Copyright © 1996, All Rights Reserved.