Shareholder battle affects ISG results

Uncertainty over the outcome of a shareholder proxy battle hindered1997 second-quarter revenues for medical imaging software developerISG Technologies. The Mississauga, Ontario, firm reported lastweek that revenues dropped 11% in the period (end-December).

ISG in December fended off a bid for control of the company launchedby Quorum Growth, a dissident shareholder group (SCAN 1/8/97).Quorum proposed to bring back former president and CEO ThomasCafarella, divest the company's image-guided surgery business,and refocus the firm on PACS software development.

While ISG won the battle, the turmoil resulted in a slowdown inthe company's sales, particularly in the image-guided surgerybusiness that Quorum said it would sell, according to chairmanand CEO Dr. Michael Greenberg.

For the quarter, ISG's revenues were $6.3 million (Canadian),down from $7.2 million in the second quarter of 1996. The firmhad a loss of $1.8 million (which included a $1.5 million one-timecharge), compared with an $88,000 profit in the second quarterof 1996. The one-time charge included costs for the proxy battleand for writing off inventory for ISG's Pulsus product line.

In announcing the results, Greenberg said that ISG's revenue growthresumed once the proxy battle was over, and the company expectsto post improved results in its third and fourth quarters.