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CSP Inc. Reports Operating Results (10-Q)

February 10, 2011 | About:
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10qk

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CSP Inc. (CSPI) filed Quarterly Report for the period ended 2010-12-31.

Csp Inc. has a market cap of $15.5 million; its shares were traded at around $4.27 with a P/E ratio of 17.4 and P/S ratio of 0.2. Hedge Fund Gurus that owns CSPI: Jim Simons of Renaissance Technologies LLC. Mutual Fund and Other Gurus that owns CSPI: John Rogers of ARIEL CAPITAL MANAGEMENT LLC.

Highlight of Business Operations:

As shown above, total revenues increased by approximately $3.4 million, or 18%, for the three months ended December 31, 2010 compared to the three months ended December 31, 2009. Revenue in the Systems segment increased for the current year three month period versus the prior year three month period by approximately $1.4 million, while revenues in the Service and System Integration segment increased by approximately $2.1 million, resulting in the overall increase of approximately $3.4 million.

Product revenues increased by approximately $2.2 million, or 14% for the three months ended December 31, 2010 compared to the comparable period of the prior fiscal year. This change in product revenues was made up of an increase in product revenues in the Service and System Integration segment of approximately $2.3 million over the prior year three months, offset by a decrease in product revenues in the Systems segment of approximately $0.1 million versus the prior year three months.

The increase in the Service and System Integration segment product sales of approximately $2.3 million was due primarily to increased product sales in the U.S. division of the segment. The increase in the U.S. reflected increases in shipments to a wide spectrum of customers. Sales to our largest customer of fiscal year 2010 and the quarter ended December 31, 2010 increased by $0.7 million compared to the prior year three month period ended December 31. However, it should be noted that sales to this customer for the three months ended December 31, 2010 were approximately $2.7 million compared to the fiscal year 2010 quarterly average sales to this customer of approximately $5.6 million per quarter. The remainder of the increase was derived from more recently acquired customers, and the increase was made up of a larger number of smaller customers compared to the prior year.

As shown in the table above, service revenues increased by approximately $1.3 million, or 37%, for the three months ended December 31, 2010 compared to the comparable three month period ended December 31, 2009. Service revenue in the Systems segment increased by approximately $1.5 million, while service revenue in the Service and System Integration segment decreased by approximately $0.2 million, as shown in the table above.

The $1.5 million increase in Systems segment service revenue was substantially the result of an increase in royalty revenue from Lockheed Martin which was approximately $1.4 million for the three months ended December 31, 2010, versus no royalty revenue for the three months ended December 31, 2009. This $1.4 million in royalty revenue recognized in the three months ended December 31, 2010, represents approximately 88% of the total royalty income we expect to recognize for all of our fiscal year ending September 30, 2011.

The decrease in the Service and System Integration segment service revenue as shown in the table above, was driven by lower service revenues from the segment s German and United Kingdom divisions which decreased by approximately $0.3 million and $0.1 million, respectively. These decreases were offset by an increase in services revenue from the segment s US division of approximately $0.2 million. The decreases in service revenue from our German and United Kingdom divisions was attributed to the unfavorable economic conditions in Europe, which has resulted in reduced demand for IT project orders and/or delays in the commencement of projects. The increase from the U.S. division was due substantially to revenue recognized on the final phase of a large IT infrastructure project which was completed during the three month period ended December 31, 2010.

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