Data and transaction services company Connxion (ASX:MYR) has halved its revenue forecast for FY11 as a result of exiting its managed services business.
The company is now expecting revenue of $17 million to $19 million, compared to its previous forecast of $38 million.
But the company now expects its ebitda to at least break even, compared to an ebitda loss of $1.5 million for FY10.
Adjusted for the reporting standards CXN used to calculate its forecasts, the company earned $1 million ebitda in the first half, so the forecast indicates an ebitda decline for 2H11.
In a market update, Connxion also admitted that revenue for the second half would be reduced by a proportionately higher amount that the decrease in cost of sales and other overheads, but said it was “aggressively pursuing solutions to mitigate this situation.”
It added that the full impact of its other moves to cut overheads would not be felt until FY12.
Connxion decided to exit managed services because a number of contracts were failing to deliver acceptable margins. Its relevant subsidiaries have been placed into voluntary administration.
The company plans instead to further develop its e-billing, payments, rewards and data analytics businesses, which had so far proved more profitable.
The market update stated that Connxion is preparing to develop its operations in Australia, Asia and China.
CXN shares fell 18.18% to $0.009 on Friday after the company made the announcement.