South African and JSE-listed technology company Gijima will have to lay off around 250 members of its staff if it wants to stay afloat, as the company’s stocks took a further nose-dive on Thursday. On Tuesday, stocks in Gijima slumped by almost 50% after the company announced a first-half loss.
“The company has incurred expenditure of some R47m during the interim reporting period on a major project without recognising revenue. Differences over pricing methodology and scoping on this project have now been resolved with our customer,” Gijima said in a statement at the time.
But current CEO Eileen Wilton, who took over from Jonas Bogoshi late last year, says there are a number of plans in place to get Gijima out of its current financial troubles. Out of the 2500 employees, Wilton said around 250 employees who “don’t perform” will be let go.
Wilton also conceded that a number of mistakes were made with a particular client, which led to a loss of revenue. “We had one large project where, based on the delivery of milestones, there is a revenue mismatch. With the benefit of hindsight, we should have matched the inflow of cash with the outflow.”
However, she is confident that Gijima will be able to recover from the damage. “I can’t give you forward-looking projections, but we have met our targets for three months out of three, since the turnaround plan agreed to in November. We feel satisfied that we have the right plans and can deliver on expectations.”
“There’s no doubt this is a challenging period, but I’m buoyed by the prospect of this turnaround,” Wilton concluded.
According to Fin24, Gijima’s stock is currently trading at 13 cents a share, which is 2 cents higher than when the markets closed yesterday afternoon in Johannesburg. On 2 April it dipped as low as 7 cents a shares, which is in stark contrast to the R1.23 per share it enjoyed in February 2010.
Charlie Fripp – Consumer Tech editor