Ottawa's Espial Group Inc. reported weaker revenues for its fourth quarter Monday and a loss driven in part by restructuring costs.

The maker of software for Internet-based television services reported a net loss of $2 million, or 23 cents per share, compared to a loss of $900,000, or $5.19 per share, in last year's Q4.

Contributing to the loss was $700,000 in severance costs and other related restructuring charges arising from the company's announcement last November that it would cut roughly one third of its workforce to reduce its cash burn rate by about $3 million a year.

The big difference in the loss amounts per-share year over year stemmed from the issuance of new shares as part of Espial's IPO last June.

Revenues during the fourth quarter fell to $2.1 million from $3.4 million a year ago, affected by delays in closing "service provider client contracts and completing network vendor channel development initiatives," Espial said in its earnings report. However, the company emphasized this is indicative of continued softness in the industry as a whole.

"During the fourth quarter, Espial continued to make good progress on the key 2007 business objectives that we outlined at the end of our second quarter," chief executive Jaison Dolvane said in a statement. "These were to secure one major service provider customer, which we announced during the fourth quarter, and one channel partner for our Evo IPTV Service Platform, which we announced last month."

In November, Espial announced a US$1.5-million deal with a major European service provider for its Evo IPTV Service Platform for deployment on an existing cable network with 1.7 million subscribers. A couple of weeks later, it signed a reseller agreement with Avail Media, a provider of content aggregation and IPTV transport services in North America. Last month came another reseller agreement, this time with an un-named vendor of networking equipment focused on European telecom and cable operators.

"However, as we have previously commented, we expect significant variability to persist in our quarterly revenue due to the long integration and sales cycle, and variable timing of closing contracts," Mr. Dolvane continued. "We remain confident that our market opportunity will continue to expand as global service providers are increasingly seeing video delivery as a critical part of their survival."

Gross margins during the quarter slipped to $1.2 million from $2.8 million the year before, due largely to a higher proportion of revenues coming from lower margin professional services or customer support rather than software.

For the entire fiscal year, Espial reported a net loss for the year of $10.8 million, or $1.98 a share. Excluding a one-time stock-based compensation expense, the loss was $6.7 million, or $1.23 a share, compared to a loss of $5.4 million, or $10.60 a share, in 2006.

Full-year revenues amounted to $8 million, compared to $10.7 million in 2006.

Espial finished the year with cash and short-term investments of $17 million.

NEW CFO

The company also announced a new CFO on Monday, Carl Smith. Mr. Smith will replace Bob Daly, who first joined Espial as a part-time consultant and took on the CFO role full-time to help complete the company's IPO last year.

"I am very pleased to welcome Carl Smith to Espial as our new chief financial officer," said Mr. Dolvane. "Carl brings to Espial a wealth of experience in the areas of financial and operational control, mergers and acquisitions, and in building strong relationships within the investment community. His experience and successful track record position him well to make significant contributions to Espial's growth plans."

Mr. Smith, a chartered accountant, has more than 15 years experience in finance and executive leadership with positions in public and private high tech companies. Most recently, he was CFO of Nuvo Network Management and he also served in that role with OZ Optics.