Halifax Corp. Sees 3Q Loss on New Contract

Computer hardware company Halifax Corp. on Tuesday said it expects to post a third-quarter loss on operating costs related to a new contract.

For the three months ended Dec. 31, the company foresees a loss of $850,000, down from a profit of $202,000, or 7 cents per share, a year ago. In the year-ago quarter, Halifax posted revenue of $13.4 million.

The loss stems from higher-than-expected ramp-up and operating costs associated with a new enterprise maintenance contract which began in the summer of 2004, expanded in the fall and runs through December 2005. The agreement was valued at $6.7 million with a potential value of more than $20 million if it is extended through 2008.

Charles McNew, president and chief executive, said in a release, "We have taken corrective actions internally, and we also are negotiating a revised plan tied to specific customer expectations for equipment and support staff going forward."

The company is scheduled to report its third-quarter results in the second week of February.

Halifax Corp. shares rose 9 cents to close at $5.94 on the American Stock Exchange.

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