Senetas issues second half 2010 profit warning

Public sector spending cutbacks could result in a $1.5 million loss

ASX-listed security vendor Senatas (ASX: SEN) has warned that its current half year results could be a loss of up to $1.5 million due to current expenditure reviews by governments and agencies around the globe.

“The continuing effects of depressed global economic conditions have resulted in pressure on Governments to reduce spending as countries reassess public sector debt levels,” the high speed network encryption hardware company said in an ASX advisory.

“Although the company has a strong pipeline of sales opportunities, many of the company’s larger sales opportunities sit with Government and Defence Agencies that are undertaking significant expenditure reviews resulting in project delays and reductions.”

As a result of these trading conditions, the prediction of transaction timing and size was difficult and subject to volatility. However, the company expected that its profit before tax for the half year ending 31 December to be in the range of between a loss of $1.5 million and break even.

Despite the volatile current half, the outlook for 2011 was relatively good with signs of emerging recovery in several regions, according to the company.

“As economic recovery takes place the company expects many of these delayed projects to be brought back on line as cyber security concerns remain at the forefront of critical issues facing governments and organisations around the world,” the advisory reads.

In September, the company touted new functionality for its high-speed network encryption platform, claiming enhanced security for virtual local area networks (VLANs).

In May, despite announcing almost a year ago that it was signing a bulk ICT services contract with EDS and Infosys, Telstra finally axed Senetas as a local supplier.

In April, the company launched into the Philippines, via Manilla-based partner Infosight Solutions, banking that the country’s Government and financial institutions will agree on the need for greater network encryption.

Follow Tim Lohman on Twitter: @TLohman

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