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Friday, Oct 7, 2022

Bin Laden Death Weighs Heavy on Firm’s Shares

The killing of Osama bin Laden has taken a toll on the stock of a Calabasas business software company.

Shares of NetSol Technologies Inc. plummeted 45 percent last week to 83 cents, making it the week’s biggest loser on the LABJ Stock Index (see page 24). The stock plunged after the company announced that unrest in Pakistan after an American raid on bin Laden’s compound in May forced it to lower earnings expectations for its 2011 fiscal year. The company has a big office in Pakistan, and customers there delayed buying from NetSol.

NetSol, which will release fiscal year earnings in September, announced July 21 that it anticipates revenue for the year to fall between $35 million and $36 million. The company had previously provided guidance of $40 million to $44 million.

NetSol Chief Executive Najeeb Ghauri attributed the decrease to “geopolitical issues that contributed to a longer-than-expected sales cycle” in a statement.

NetSol executives were not available for comment for the story.

The 732-person company licenses its software technology primarily to businesses in the health care, financial services and manufacturing industries. It has offices in eight cities, including Lahore, Pakistan, and Bangkok, Thailand.

In a July 28 conference call with investors, Ghauri said that NetSol customers were worried about the security of its Lahore facility after unrest in Pakistan that followed the killing of bin Laden. Those customers delayed signing contracts with NetSol until the company explained its emergency-response plan.

“These concerns first came to our attention in mid-May (and delayed) a few backlogged license agreements that were scheduled to be signed,” Ghauri said. “It was this reaction that caused the shortfall in our revenue guidance.”

For the third quarter of its fiscal year, NetSol reported revenue of $10.8 million, up from $8.9 million in the same period last year. Net income was $3.3 million compared with $589,000 in the third quarter last year.

In response to recent customer concerns about security, NetSol is expanding its center in Bangkok, where the company develops software, provides tech support to customers and does business analysis. NetSol plans to add sales and marketing teams in Bangkok and to increase its technology staff there from 10 to more than 50 within the first half of the 2012 fiscal year.

Building up the company’s Bangkok office should help alleviate its dependence on its Lahore location, Ghauri said in the conference call.


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