Drive for SME market hits NetComm's profits

Stuart Corner
Wednesday, 01 March 2006 17:36

IT Industry - Strategy

NetComm has reported a 13.2 percent increase in revenue to $10.3 million and a 612 percent increase in its net loss to $0.392 million for the half year ended 31 December 2005. It said a number of one-off costs on initiatives to support its focus on the SME market contributed to the higher loss.

Managing director David Stewart said also that while a drive to increase market share had helped boost revenues, gross margins suffered. " Profitability is expected to improve in the second half as supported by current data," he said.

The company is striving "to build a viable presence in the SME market" and to this end says it is "Increasing the tempo and sophistication of product development; establishing strategic partnerships that will leverage market-leading technologies to fast-track NetComm products to market; identifying and implementing mergers and acquisitions that will increase geographic coverage and tap new streams of revenue."

During the half year it spent $70,000 on M&A consultancy and legal fees to acquire Dynalink and Askey Australia, $200,000 on product development, testing and certification expenses for new products developed under an alliance with Octtel Communications, a global developer of VoIP technology for SMEs; and $90,000 to redesign and relaunch product packaging and to redesign its web site with e-commerce capabilities.

A further $150,000 went to develop the NetComm Auto Provisioning System –s oftware that will reside on the servers of ISPs and remotely configure their customers' modems. NetComm says "This will reduce the cost of customer acquisition and support for ISPs, and therefore strongly differentiate NetComm from competitors, helping it to win and retain major accounts."

The company is also planning to release a new product range in the third quarter of the current financial year.