NetComm triples revenues on back of wireless broadband product sales

Stuart Corner
Thursday, 20 August 2009 07:51

IT Industry - Strategy

Comms equipment maker NetComm (ASX: NTC) has turned in a stunning result for the year to 30 June 2009 with a tripling of revenues to $78.5m, an almost sixfold increase in EBITDA to $6.2 million and a tenfold increase in pretax profits to $5.3 million.

A higher income tax benefit in FY08 ($1.63m) than in FY09 ($0.595m) boosted after tax profit in FY08 to give the company an after tax profit increase of 175 percent from FY098 to FY09 taking after tax profit to $5.9m. NetComm will start paying dividends again and will provide details shortly.

NetComm said its performance was "a direct result of the company's successful implementation of its strategy to reduce its exposure to rapidly commoditising broadband devices and position itself as a world-leading supplier of 3G wireless broadband technologies."

It claims to have put in place a concerted international marketing push that has seen its wireless broadband products put through 35 trials by carriers around the world. Domestically it claims to have made strong sales to a number of domestic customers, in particular to Telstra. No others were named.

The company turned net operating cashflow around from a negative $1.1m last year to a positive $8.9m this year and after spending $2.6m on acquisitions, plus other purchases finished they year with $4.8m in cash. NetComm is presently spending some of its cash pile on a share buyback. It announced in June plans to buy back up to 10 percent of its issued shares over a 12 month period. At the prevailing price this would cost it $1.65m.

In October 2008 NetComm acquired Call Direct, a specialist developer of industrial 3G wireless data and voice solutions for industrial and commercial applications for $2.275m in cash. This was followed in May 2009 with the acquisition of C10 Communications from its parent, Lemarne Corporation (ASX: LMC). for $3.2m in cash.

According to NetComm, C10's product portfolio covered a range of DSL filter products including a patent pending VDSL filter technology, then under development. NetComm said it believed that VDSL and VDSL2 were likely to experience strong growth in world markets over the short to medium term, but "Most importantly, C10 strengthens NetComm's growing relationships with recognised telecommunications carriers and ISPs." C10's customers included Telstra, AAPT, Primus Telecom, Internode and TPG.