Peter Strom, CEO of March Networks. (Darren Brown, OBJ)

March Networks (TSX:MN) continued its losing streak in the first quarter of its fiscal 2009 year with a loss of $2.4 million, despite strong year-over-year revenue growth, as the company was hurt by contract losses on passenger rail projects.

The Ottawa-based digital surveillance technology maker said the first-quarter net loss was compared to a $374,000 profit, or two cents per share, in the same period a year earlier. Per-share losses for the first quarter of fiscal 2009 were 14 cents per share.

The loss included a $1.2-million provision for the contract losses, which will be delivered over fiscal years 2009 through 2015, the company said, although March Networks said it was negotiating with the unnamed customer to mitigate the losses.

The bright spot in March Networks's earnings was the 13.6-per-cent gain in revenues, which rose to $27.8 million, with international sales making up a larger proportion of top-line earnings compared to a year earlier.

March Networks said international revenues represented 35 per cent of total revenue, up from 16 per cent in the same quarter last fiscal year.

The company also indicated it was making good progress in its efforts to diversify beyond its previous reliance on Wal-Mart, with revenue excluding its largest customer up 57 per cent compared to a year earlier.

"Q1 was a great start to the fiscal year, highlighted by exceptional global growth and continued diversification of our customer base," said March Networks CEO Peter Strom in a statement.

The company also made a reference to the 20 layoffs Tuesday, with CFO Ken Taylor adding that March Networks "is addressing a lower-than-expected Q1 gross margin level with product cost reduction initiatives and has recently completed a staff reduction to keep the company in line with its operating earnings expectations."

March Networks spokesperson Peter Wilenius had told OBJ yesterday that the company is aiming to become profitable sometime this fiscal year.

The company maintained the full-year guidance released at the end of its last fiscal year, predicting revenues of between $100 million and $115 million, while operating earnings before interest, taxes, amortization of acquired intangibles and stock-based compensation expense are expected to be between $500,000 and $5 million.

March Networks's stock price dropped following the earnings release on Wednesday evening, and continued to fall on Thursday morning, declining by 14 cents to $4.91 at 11:09 a.m. on the Toronto Stock Exchange.