During last week's quarterly conference call with Wall Street, Avatech explained why their growth was flat from the year before:
This past year was a challenging one and the lack of growth in total revenues can be attributed to several factors:
- First of all, the general economic malaise that currently exists throughout the country, particularly in the building sector, as a resulted in a slowdown of purchasing decisions by the customers in our markets.
Secondly, competition for the business that exists is increasing, making it more difficult for us to garner a greater market share.
Finally, our anticipation of the overall market weakness, combined with our commitment to provide a greater focus and emphasis on achieving strong operating results led us to holding off on the internal hiring plans that we originally contemplated for the past fiscal year. In retrospect, it was the right decision and we are hoping to prudently invest in new hires, both in sales and engineering professionals in this fiscal year.
Part of the blame falls on the current credit crunch:
A good portion of our building market is driven by commercial and residential development. The engineering design life cycle in this segment begins with surveyors and civil engineers, followed by architects and construction engineers. Throughout last year we began to see some indirect impacts of credit tightening and reductions due to the economy on our customers.
As credit flow to developers was delayed we saw some reductions in our customers work flow that obviously impacted their ability to fund and go forward with technology upgrades that we provide. While we believe that there exists a strong demand for solutions, our customers ability to fund and move forward on implementing these solutions was somewhat impacted by the economy.
But it's not all gloomy:
We are seeing a positive trend in things like agricultural manufacturers due to the flow of money in this sector and we are taking advantage of this as best we can.
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