Aussie veterans attract US investors

Platypus Technology, the company set up early this year by Geoff O'Reilly and Colin Lillywhite - both formerly of Hypertec -- to build solid state hard drives, has attracted $US7 million investment from The Carlyle Group and an Asian fund managed by JAFCO Investment (Asia/Pacific) in Singapore. The funds will be used to finance the company's international expansion, particularly with operations in the US and Europe.

"This round of capital raising will enable Platypus Technology to dramatically expand our research and development operation and focus on rapid development of our next generation products," explained Lillywhite. "We'll be doubling our R&D Resources by growing our Sydney-based R&D team to 16 people. We have new sets of products in development which we want to bring to the Australian and international markets as quickly as possible."

Lillywhite added that one of Platypus' priorities is to penetrate international markets. "The US presents the greatest potential because of the market size and will be a key focus as we maximise the enormous opportunities there." Lillywhite will move to a newly opened Platypus office in New Hampshire to oversee the US and European operations. He will be joined there by marketing director Toni Sutherland.

Another interesting link between Platypus and Australian IT personalities comes in the form of the managing director of The Carlyle Group's Technology Venture Fund - Asia, who is Tony Jansz, who had been head of Intel's Australian operation for a number of years.

KAZ buys Fundi for mainframe skills

KAZ Computer Services has bought itself some solid mainframe expertise by agreeing to purchase the Western Australian IT outsourcing and systems software developer Fundi Software Group. A spokesman said Fundi's software business focuses on development of IBM mainframe systems utility software, while its outsourcing activities centre on the WA market and include customers like Alcoa of Australia, Western Power and the Insurance Commission of WA.

Fundi was established in 1982 and has a staff of more than 75. Its purchase will be funded by $A2.9 million in cash and a further $A2.9 million in KAZ shares.

"Fundi brings to KAZ the specialist skills in IT mainframe outsourcing which are necessary for KAZ to increase its market share throughout the Asia/Pacific region in the mainframe segment of the IT outsourcing market," explained Peter Kazacos, managing director of KAZ.

"KAZ now has all of the requisites to aggressively pursue mainframe opportunities throughout the region with our established network of nine data centres and our depth of technical expertise."

Keycorp buys Internet pay expertise

Australian smart card specialist Keycorp has agreed to buy Internet payment services provider Camtech through a share swap valued at about $A10 million. A spokesman said that in Australia Camtech has a dominant market share for online real time Internet payments. Its clients include Harris Technology, The Australian Football League, the Government of Western Australia, travel.com.au, and greengrocer.com.au. It also has agreements with Commonwealth Bank of Australia, Westpac, NAB, ANZ, St George Bank, BankWest and Bendigo Bank.

Michael Thomes, CEO of Keycorp, said the acquisition will strengthen Keycorp's Nobil Internet payment gateway technology.

Business briefs

IT solutions developer IT&e has agreed to buy software developer Network400, which provides software, support and training for the IBM midrange and PC platforms. The transaction will be financed by a mixture of cash (30 per cent) and IT&e shares, which will be issued at 80 cents each.

Telecommunications solutions provider Pracom has entered a distribution and development agreement with Singaporean systems integrator Unified Communications, which also has offices in Malaysia, Indonesia and the Philippines. Unified will market Pracom's moBIZ real time billing service and will be given access to Pracom's middleware for the creation and deployment of advanced telecommunications applications.

Computer Sciences Corp's Australian subsidiary has joined an alliance set up by Brisbane company CiTR and Inprise/Borland with an eye to capturing a share of the market for government portals (The Deal Makers section of The Rust Report, October 13). CSC will provide customers with Web portal hosting and services delivery capability, a spokeswoman said.

Listed smart building specialist CBD Online has followed its recent acquisition of e-commerce company Halescom by buying office supplies company Office Tech. The deal will be financed by payment of $A1 million in cash and $A3.6 million in shares.

Telecom NZ has declared its bid to buy the last 20 per cent of AAPT unconditional after receiving more than 90 per cent of the available shares.

International investors are not moved by Telstra's giant Asian deal with Pacific Century Cyberworks and this week sold PCCW's shares down to a low of $HK5.90. There is now talk that Telstra may be able to gain even greater control of the HKT Mobile joint venture. Under last week's revised deal Telstra had already gain a controlling interest in the venture.

Corporate quarters

When you're as big as IBM it becomes hard sometimes to maintain high levels of revenue growth, and then the investors get even more upset than they would with a weightless little dot-com. So when IBM could only lift its revenue three per cent in the third quarter shareholders dumped its stock so violently that the Dow Jones index plummeted to beneath the 10,000 barrier. Big Blue's revenue for the quarter climbed from $US21.144 billion a year ago to $US21.781 billion, but Wall Street had wanted more. Net profit rose 11 per cent from $US1.757 billion to $US1.958 billion, which was in line with analysts' expectations.

Lou Gerstner, IBM's CEO, attributed the slow revenue growth to three factors:

Demand for microelectronics products outstripped the company's ability to supply components; The release of a 64-bit mainframe slowed demand for the S/390 "servers", and Some sectors of the software business slowed "unexpectedly" during September.

In the Asia/Pacific region revenue climbed 18 per cent to $US4.3 billion.

Apple Computer had warned investors that its fourth quarter would be soft, and it didn't let them down. In the quarter to September 30 revenue climbed 40 per cent to $US1.87 billion and net profit before one-off gains rose 20 per cent to $US108 million, after accounting for $US62 million derived from the sale of shares in ARM Holdings. Apple has warned that it expects the first quarter of its new financial year to be soft as well because of excessive inventory in the channel. Last week the company introduced a rebate program in the US to try to boost sales of its G4 cube and PowerBook computers, which have been described as "underwhelming".

Microsoft lifted its first quarter net profit 18 per cent from $US2.19 billion to $US2.58 billion before making adjustments for accounting changes. Revenue for the quarter rose from $US5.38 billion a year ago to $US5.80 billion. John Connors, Microsoft's CFO, said the results had been solid across all businesses but growth had been led by faster deployments of Windows 2000 Professional in the business sector and Windows Me in the consumer arena.

After warning last month that European operations would drag down overall performance, Intel made a net profit of $US2.9 billion on revenue of $US8.7 billion in its third quarter. The profit was 52 per cent higher than the previous third quarter result, but was 18 per cent below the net profit in the second quarter of this year. Revenue was 19 per cent higher than in the previous third quarter.

Sun Microsystems enjoyed a record performance in its first quarter to October 1 and inadvertently posted the news on its Web site before it had made the official announcement on Wednesday. Revenue for the quarter rose 60 per cent to $US5.045 billion and net profit rose 85 per cent from $US276 million to $US510 million. "This is a great beginning to our fiscal year 2001," noted CEO Scott McNealy.

EMC lifted revenue 55 per cent to $US2.14 billion in its third quarter when net profit climbed 55 per cent to $US458 million. The strong performance prompted some philosophical thoughts from CEO Mike Ruettgers. "There is no business or economic trend that is more constant than the growth of information," he noted. "Not only its sheer volume, but its increasing importance to an organisation's success." In the Asia/Pacific region EMC lifted its storage revenue 130 per cent.

PeopleSoft earned a net profit of $US23.4 million on revenue of $US443.1 million in the third quarter to September 30. A year earlier the company generated revenue of $US346 million and a net profit of just $US500,000. The turnaround in the company's fortunes was attributed to the evolution of the Internet from a consumer vehicle to a business tool embraced by major companies and the strength of the PeopleSoft 8 software in that market.

Sybase lifted third quarter revenue 11 per cent from $US216.1 million to $US239.1 million, and boosted profit 40 per cent from $US19.1 million to $US26.7 million. After accounting for charges relating to acquisitions and other unusual items the company's net profit grew slightly from $US16.1 million a year ago to $US16.5 million.

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