Netia board warns of tough times ahead after poor Q1

The revenues in Q1 2006 amounted to zł.218.4 million as compared to zł.216.7 million a year ago, but the company incurred a zł.5.8 million operating loss as compared to zł.24.9 million profit in Q1 2005. The company's board has already announced that Netia may close the whole year with a loss, although up to now analysts had expected a profit of zł.35 million. The board claims that it is only a temporary period of worse results due to investments in WiMAX and UMTS and that in 2007 and 2008 the company's revenues will increase by more than 10%. However, analysts from DB Securities believe that Q1 is a warning which points to the decreasing profitability of Netia, "The board concentrated on restructuring and acquisitions and began to think about investments and organic growth too late. It should have thought about the entry into the mobile phone market three years ago," commented an analyst with DB Securities Krzysztof Kaczmarczyk. (Puls Biznesu, p. 11) E.B.