Wireless Age warns of 2005 loss due to write-down

TORONTO (CP) - Wireless Age Communications Inc. (OTCBB:WLSA - news) is warning of a goodwill writedown in its 2005 results that will generate a loss of more than $2 million.

In a statement issued after markets closed Friday, chief financial officer Gary Hokkanen said: "Overall we've had an extremently successful year; however the impairment charge will create a loss that will likely be larger than fiscal 2004."

The wireless telcom company lost $2 million, or nine cents per share, in 2004.

Hokkanen also said that "revenues during the fourth quarter were over $7 million compared to approximately $4.8 million during the fourth quarter of fiscal 2004. Revenues for fiscal 2005 will be over $24 million, a substantial increase over $15.2 million in fiscal 2004."

The latest writedown reflects a change in value of corporate goodwill, an accounting term that values the reputation, know-how and trademarks of a company. Companies involved in takeovers usually write off goodwill expenses on their earnings statements when they have paid more for a target company than the company's book value.

At the end of November, Wireless Age revised its 2005 earnings guidance downward but Hokkanen said in a Nov. 29 news release that "we believe Wireless Age will still achieve record earnings in 2005."

At the time, the company was expecting earnings per share of five cents.

It noted that operations had been affected by a lack of traditional fourth-quarter spending by major Canadian telephone companies and a major client's trouble getting financing.

On Friday, chief executive Bradley Poulos said "shareholders should consider this step a cleansing of the balance sheet.

"We're at a turning point. The management team and I are going to focus on the future, update inefficient practices and work to create a consistently profitable operation going forward."

He noted that impairment charges are non-cash adjustments.

On Friday, the company's stock gained 1.5 cents to 37 cents on the Over the Counter Bulletin Board, a market for junior stocks.