Melbourne IT looks to IT services for growth

 

Reports moderate revenue growth and flat profits.

ASX-listed Melbourne IT (MLB) is not expecting net profit growth until 2011, investors heard today.

The internet services company today reported an 8 percent year-on-year revenue increase to $200.1 million in 2009, after suffering a 20 percent drop in net profit during the first half of the year.

"There's no question that Melbourne IT's first half was disappointing, but we've definitely rebounded in the second half," said the company's managing director, Theo Hnarakis.

"The worst is behind us," he said. "However, due to our investments in IWS [integrated web services] and OSS [operational support services], net growth will be moderate in 2010."

Melbourne IT had a rocky start to 2009, with integration headaches and pressure from the global financial crisis, as well as service outages that contributed to 20 percent of customer churn.

Hnarakis attributed the company's recovery to tight cost control strategies such as renegotiating supplier contracts, not paying staff bonuses and increasing operational efficiencies.

It had also migrated from IBM storage products to EMC, which Hnarakis said improved service stability, provided 50 percent more storage and lowered power consumption for the same cost. Melbourne IT has now abandoned its investment in IBM storage.

Although Melbourne IT's earnings before tax decreased by one percent year-on-year to $23.4m in 2009, its net profit after tax rose four percent to $16.8 million because of the effect of its May 2008 acquisition of Verisign's Digital Brand Management Services (DMBS) on its tax structure.

The company also reported that its revenue from IT services was contributing a increasing portion of its overall revenue, signalling a shift from its traditional domain name registration business to IT service provision.

"We are being more aggressive with sales and marketing," Hnarakis said. "More of our resources are now focused on upselling key customers rather than on retaining customers by offering incentives."

"We are leveraging our relations with key customers to upsell from domain name management to brand management," he said.

Over the next three years, Melbourne IT planned to invest $18 million in its Integrated Web Services (IWS) business - which includes its back -end support systems - and an additional $7 million on its Operational Support Systems (OSS) and infrastructure.

Hnarakis expects a strong return on investment (ROI) from its OSS investment in 2011, and ROI from its IWS investment in 2012.

He also cited aggressive acquisition plans, and expected its DBMS division to be completely integrated by June 2010.

"We are very much in the embryonic stage of growth in our industry," he said. "We want to take advantage of the immaturity of the market ... and make sure we get as much market share as possible."


Melbourne IT looks to IT services for growth
 
 
 
Top Stories
Frugality as a service: the Amazon story
Behind the scenes, Amazon Web Services is one lean machine.
 
Negotiating with the cloud email megavendors
[Blog post] Lessons from Woolworths’ mammoth migration.
 
Qld govt to move up to 149k staff onto Office 365
Australia's largest deployment, outside of the universities.
 
 
Sign up to receive iTnews email bulletins
   FOLLOW US...

Latest VideosSee all videos »

The great data centre opportunity on Australia's doorstep
The great data centre opportunity on Australia's doorstep
Scott Noteboom, CEO of LitBit speaking at The Australian Data Centre Strategy Summit 2014 in the Gold Coast, Queensland, Australia. http://bit.ly/1qpxVfV Scott Noteboom is a data centre engineer who led builds for Apple and Yahoo in the earliest days of the cloud, and who now eyes Asia as the next big opportunity. Read more: http://www.itnews.com.au/News/372482,how-do-we-serve-three-billion-new-internet-users.aspx#ixzz2yNLmMG5C
Interview: Karl Maftoum, CIO, ACMA
Interview: Karl Maftoum, CIO, ACMA
To COTS or not to COTS? iTnews asks Karl Maftoum, CIO of the ACMA, at the CIO Strategy Summit.
Susan Sly: What is the Role of the CIO?
Susan Sly: What is the Role of the CIO?
AEMO chief information officer Susan Sly calls for more collaboration among Australia's technology leaders at the CIO Strategy Summit.
Meet the 2014 Finance CIO of the Year
Meet the 2014 Finance CIO of the Year
Credit Union Australia's David Gee awarded Finance CIO of the Year at the iTnews Benchmark Awards.
Meet the 2014 Retail CIO of the Year
Meet the 2014 Retail CIO of the Year
Damon Rees named Retail CIO of the Year at the iTnews Benchmark Awards for his work at Woolworths.
Robyn Elliott named the 2014 Utilities CIO of the Year
Robyn Elliott named the 2014 Utilities CIO of the Year
Acting Foxtel CIO David Marks accepts an iTnews Benchmark Award on behalf of Robyn Elliott.
Meet the 2014 Industrial CIO of the Year
Meet the 2014 Industrial CIO of the Year
Sanjay Mehta named Industrial CIO of the Year at the iTnews Benchmark Awards for his work at ConocoPhillips.
Meet the 2014 Healthcare CIO of the Year
Meet the 2014 Healthcare CIO of the Year
Greg Wells named Healthcare CIO of the Year at the iTnews Benchmark Awards for his work at NSW Health.
Meet the 2014 Education CIO of the Year
Meet the 2014 Education CIO of the Year
William Confalonieri named Healthcare CIO of the Year at the iTnews Benchmark Awards for his work at Deakin University.
Meet the 2014 Government CIO of the Year
Meet the 2014 Government CIO of the Year
David Johnson named Government CIO of the Year at the iTnews Benchmark Awards for his work at the Queensland Police Service.
Q and A: Coalition Broadband Policy
Q and A: Coalition Broadband Policy
Malcolm Turnbull and Tony Abbott discuss the Coalition's broadband policy with the press.
AFP scalps hacker 'leader' inside Australia's IT ranks.
AFP scalps hacker 'leader' inside Australia's IT ranks.
The Australian Federal Police have arrested a Sydney-based IT security professional for hacking a government website.
NBN Petition Delivered To Turnbull's Office
NBN Petition Delivered To Turnbull's Office
UTS CIO: IT teams of the future
UTS CIO: IT teams of the future
UTS CIO Chrissy Burns talks data.
New UTS Building: the IT within
New UTS Building: the IT within
The IT behind tomorrow's universities.
iTnews' NBN Panel
iTnews' NBN Panel
Is your enterprise NBN-ready?
Introducing iTnews Labs
Introducing iTnews Labs
See a timelapse of the iTnews labs being unboxed, set up and switched on! iTnews will produce independent testing of the latest enterprise software to hit the market after installing a purpose-built test lab in Sydney. Watch the installation of two DL380p servers, two HP StoreVirtual 4330 storage arrays and two HP ProCurve 2920 switches.
The True Cost of BYOD
The True Cost of BYOD
iTnews' Brett Winterford gives attendees of the first 'Touch Tomorrow' event in Brisbane a brief look at his research into enterprise mobility. What are the use cases and how can they be quantified? What price should you expect to pay for securing mobile access to corporate applications? What's coming around the corner?
Ghost clouds
Ghost clouds
ACMA chair Chris Chapman says there is uncertainty over whether certain classes of cloud service providers are caught by regulations.
Was the Snowden leak inevitable?
Was the Snowden leak inevitable?
Privacy experts David Vaile (UNSW Cyberspace Law and Policy Centre) and Craig Scroggie (CEO, NextDC) claim they were not surprised by the Snowden leaks about the NSA's PRISM program.
Latest Comments
Polls
Which bank is most likely to suffer an RBS-style meltdown?





   |   View results
ANZ
  21%
 
Bankwest
  9%
 
CommBank
  11%
 
National Australia Bank
  17%
 
Suncorp
  24%
 
Westpac
  19%
TOTAL VOTES: 1429

Vote