Iocom, Equico on $50m outsourcing mission

Listed company Iocom has formed a joint venture with financier Equico Corporation to set out with a $A50 million kitty to buy the technology departments, hardware and software infrastructures, and staff of Australian companies under the guise of outsourcing. The venture, known as Iocom Corporate Services, aims to buy all the IT assets of companies with between 45 and 500 desktops, and will add Internet access and equipment -- like PABXs -- into the package.

A spokesman said the joint venture takes Iocom's SME outsourcing model and marries it with Equico's technology asset rental and replacement model to manage and maintain IT for SMEs.

ADP buys its entry to Australia

Giant US computing services company Automatic Data Processing has created its first direct presence in the Asia/Pacific region by buying Australian payroll services company PayConnect Solutions. By purchasing PayConnect, which has been expanding through the region for about a year, ADP has acquired an operation in Hong Kong in addition to well-established operations run from six offices in Australia. The Hong Kong offices will immediately be renamed ADP, while the Australian offices will change their name over the next six months.

"The acquisition of PayConnect Solutions will enable us to deliver . . . service to our clients conducting business in Australia and provides us with an immediate foothold in the Asia/Pacific region, where business process outsourcing is expected to grow at a 25 per cent rate," explained Gary Butler, president of ADP.

PayConnect provides its services to more than 7500 organisations in Australia and Hong Kong and generates revenue of more than $A50 million a year, a spokesman claimed.

ADP Brokerage Services Group, which is ADP's second largest subsidiary, recently formed a partnership agreement with JVD, the online financial services arm of Western Australian broker Hartley Poynton.

Telstra and PwC rush into SAP deal

No sooner had Telstra and PricewaterhouseCoopers formalised their non-exclusive ASP alliance than they further announced they had completed an agreement to provide ERP solutions from SAP in Australia and NZ. "The agreement with SAP is a key component in the alliance partners' vision of bringing world-class applications within the financial means of all organisations", claimed David Bostock, Asia/Pacific ASP leader for PwC.

At the same time, SAP has also found solid support in Australia and Asia for its Marketplace, which is powered by Telstra. In Australia the portal will be served by Qantas, American Express, National Australia Bank, Citibank and TNT as service providers. Corporate Express, Harris Technology, Blackwoods and BOC Gases will participate as sellers of products and services, and Transfield and CSR as buyers.

Les Hayman, president and CEO of SAP Asia/Pacific said the company is working with Telstra to broaden the Marketplace to include participants from Asia.

Business briefs

Acer has formed an alliance with recently-listed education technology company Worldschool to integrate Acer PCs into Worldschool's learning platform. The resulting package will be jointly marketed and promoted.

Hewlett-Packard has launched its HP Garage Program to support Australian start-ups and other IT ventures involved with the Internet economy. A spokesman said the program provides a package of financing, IT infrastructure, technical expertise and marketing programs. It is part of HP's worldwide program to provide debt funding assistance to start-ups that do not have the trading history required to attract finance through normal channels.

LookSmart, the Internet group with its heart in Australia but the bulk of its shares on NASDAQ, has been selected as the exclusive Web directory provider to the AltaVista search engine. As part of the deal LookSmart will create a customised directory for AltaVista users.

Corporate quarters

Nortel lifted its revenue 48 per cent in the second quarter from $US5.28 billion a year ago to $US7.82 billion, and boosted net profit before one-off charges from $US320 million to $US561 million. After accounting for costs related to acquisitions and other factors, the company reported a net loss of $US745 million for the quarter. John Roth, Nortel's CEO, noted that the company continued to enjoy strong growth in optical Internet, wireless Internet and high-speed local Internet markets. Revenue derived from operations within the US rose 58 per cent, compared with 43 per cent growth outside North America.

Compaq turned a loss of $US184 million a year ago into a net profit of $US387 million in its second quarter when revenue climbed from $US9.4 billion to $US10.1 billion. Sales grew strongly for the company's server and commercial PC businesses, but revenue from Compaq's global services slid four per cent to $US1.7 billion, while customer services revenue was flat at $US1.1 billion and professional services revenue fell 10 per cent to $US636 million. Sales in the Asia/Pacific region increased by 12 per cent.

Texas Instruments lifted second quarter revenue 19 per cent from $US2.4 billion a year ago to $US2.8 billion and pro forma net profit jumped from $US384 million to $US525 million. Semiconductors contributed $US2.4 billion of the total revenue, 22 per cent more than in the previous second quarter, and the company claimed to be seeing the benefits of the sale of its memory business to Micron Technology in 1998.

PeopleSoft has bounced back from a loss of $US542,000 a year ago to a net profit of $US15.9 million in its second quarter to June 30. Revenue for the quarter grew more than 16 per cent from $US360.7 million to $US420.2 million. A spokesman said PeopleSoft's CRM applications became its largest licence revenue earner, even though revenue from HRM software and financial applications increased by 38 per cent and revenue from supply chain management software increased 44 per cent.

The net loss at Silicon Graphics Inc (SGI) blew out from $US158 million to $US608 million in the fourth quarter of the company's financial year when revenue slipped 36 per cent to $US534 million. The heavy loss was attributed to supply constraints on desktop products, and the imminent release of third generation NUMA products. For the full year SGI's revenue slipped from $US2.7 billion to $US2.3 billion, and the company turned a net profit of $US54 million into a net loss of $US830 million.

In line with warnings issued early this month, SCO had a dismal time in its third quarter to June 30. Revenue slumped from $US57.1 million to $US26.9 million, and a net profit of $US4.5 million a year ago turned into a loss of $US19.2 million. "We are disappointed that revenues in our channel continue to be depressed from our pre-Y2K levels," admitted Doug Michels, president and CEO of SCO. "Additionally, a number of large customers deals did not close as expected and were delayed past the end of the quarter."

AT&T lifted second quarter net profit from $US1.59 billion to $US1.88 billion while revenue rose three per cent year-over-year to $US16.2 billion. Revenue from sales to consumers fell 7.2 per cent to $US5 billion, but sales from the company's business services group rose four per cent to $US7.1 billion on the strength of strong demand for data, IP and outsourcing services.

Xerox suffered a four per cent decline in revenue from $US4.9 billion to $US4.7 billion in its second quarter when the company's net profit fell from $US448 million to $US145 million after accounting for the costs of correcting maverick management problems in Mexico. A statement released by the company noted that the profit decline included "significant gross margin deterioration" and added that "continued disruption in customer relationships caused by the company's direct sales force realignment resulted in weak equipment sales".

LookSmart, the Internet company with the Australian roots and listings on both NASDAQ and the ASX, lifted second quarter revenue a handsome 160 per cent from the previous second quarter to $US27.3 million and reported a net loss of $US12.9 million. The company claims its network reach grew to 58 million unique users, which equates to more than three out of every four US Internet users.

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