Focus on 3G devices quadruples NetComm's sales

Stuart Corner
Friday, 13 February 2009 03:54

IT Industry - Market

NetComm (ASX: NTC) has quadrupled its sales in half year to December thanks largely to the success of its 3G wireless broadband devices. Sales revenue was $40.26 million compared to $9.6 million from the same period in 2007.

The results continue a spectacular turnaround for the company which has seen its NPAT go from a $1.38m loss in H1 of 07 to a $1.8m profit in H2 08 and now a $2.2m profit for H1 09. Netcomm reported an EBITDA of $3.67m for the half year, an increase of more than $3.18m over the corresponding period in 2007.

The company had a cash balance of $5.09mat the end of the period and says it has no long term debt. Managing director, David Stewart ,said: "We expect to maintain revenue and profit momentum for the full year."

NetComm launched nine products over the reporting period predominantly in the high growth 3G mobile and fixed wireless broadband market. Its initial success in this market was the result of significant contracts from Telstra for devices to work with Next G but the company is now expanding offshore. According to Stewart, it has over 35 trials underway with carriers overseas and has signed agreements with eight international systems integrators to distribute its range of high speed 3G broadband devices.

"These new distribution agreements are central to growing our export business, including in developing countries where the fixed networks are often limited to major cities and do not offer adequate broadband capability," said Stewart.

NetComm said the recent acquisition of the profitable specialist 3G developer Call Direct would expand its product development capabilities and lead to growth in its industrial and commercial line of business in the area of 3G communications.

NetComm moving into industrial 3G devices
NetComm purchased Call Direct Cellular Solutions 2003 in late 2008 in a cash and shares deal worth $2.275 million. It described the company as being "a specialist developer of industrial 3G wireless technology such as remote wireless fire safety monitoring devices and other unmanned safety systems," and said that the deal would "deliver NetComm a profitable industrial arm that will provide a new industrial customer base to NetComm's infrastructure division."

In an investor presentation Steward said the company's strategy over the next three years would aim to grow its international customer base to about 10, develop its domestic and international managed services business, NetAssure, broaden the range of 3G wireless products it offers to the Australian market and develop LTE products. NetComm will also look at potential mergers and acquisitions.

NetAssure is NetComm's name for a service developed by Mako Networks of New Zealand to which NetComm has the rights for Australia and Asia. It uses Mako-developed routers - which NetComm is licensed to manufacture - that connect a customer's network to a central management system. These routers enable NetComm or its channel partners to provide comprehensive remote monitoring and management services, controlling access to multiple sites through a web console.