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Shares of Irish software company plummet on Nasdaq

February 16, 2011

By Staff Reporter

By Andrew Bushe

DUBLIN — A high-flying Irish technology company, the CBT educational software group, has seen its shares on the Nasdaq plummet from a $57 high to below $7 at one stage after investors abandoned it in droves.

As of Tuesday morning, the stock’s price was at $9 15/16, but had closed over $10 the day before.

The share collapse led to a management shake-up, with Bill McCabe returning as acting chief executive. He had resigned from the job earlier this year to pursue other interests.

When first floated on the Nasdaq in 1995, the shares soared more than 50 percent and hadn’t looked back until last month.

The company has reported steady and spectacular business growth until third-quarter sales figures were below analysts’ expectations and it lost orders estimated to be worth more than $5 million in Europe.

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Millions of shares changed hands as punters bailed out of the stock and drove the share price down.

CBT — based in Clonskeagh in Dublin and San Francisco — makes software packages that allow companies to develop their own computer-based training programs.

The company was set up by Dermot Desmond in 1984, along with former Dublin teacher Pat McDonagh, using borrowings of £15,000 and help from the IDA. Desmond was involved for only a year before leaving to form his own software company.

McCabe, a business and economics graduate of QUB, joined them to handle business in Britain. CBT was later sold to British group Hoskyn’s, which was in turn bought by a French company Cap Gemini Sogeti.

When CBT’s progress faltered, McCabe and McDonagh bought it back. The company attacked the U.S. market through direct selling. Its products are rented rather than sold and CBT concentrated on building a good customer relationship so that rental sales will continue as new products are developed.

Another innovation has been alliances that have been forged with major software players and multinationals like Dell, IBM, Bell Atlantic and AT&T and Novell.

Last Wednesday, the Wall Street Journal reported that the CBT Group had lost 66 percent of its value in a week. The newspaper added that the company’s shares had lost four-fifths of their value, negating two years’ steady gains.

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