ASX-listed Legend Corporation has attributed higher than expected annual profits of $2.6 million to a massive increase in demand for memory-based consumer products.
The Australian PC and memory manufacturer, which listed on the stock exchange three months ago, reported revenue of $124.3 million for the 2003/2004 financial year, representing 37 per cent year-on-year growth.
Legend managing director, Bradley Dowe, said the figures proved there had been an upswing in market demand for both existing and new product lines.
While acknowledging the PC market as a big market, Dowe said growth in the consumer electronics space presented a wealth of opportunity for IT resellers to increase margins and sales.
“The channel has been starved of margin,” he said.
“For the last four years they have been getting the same products. The highlights have been systems with faster CPUs. But who cares?
“We see consumer memory products as very important in bringing in new margin opportunities and adding value to their existing business.”
For example, products such as MP3 and multimedia players, flash cards and removable USB drives, provided resellers with bigger sales margins without the need for ongoing service assistance or maintenance, Dowe said.
“These products have a lowered cost of support because users can’t muck around with the software or the operating system,” he said.
“In addition, desktop PCs are a push product, whereas flash cards, MP3 players and so on are pull products — people see them and want them.”
Alongside growing its memory-based production capability, Dowe said Legend was focused on expanding its operations outside of the more mature Australian and New Zealand markets and into Asian countries, such as Hong Kong and Thailand.
These markets represented about $30 million in revenue in the past year.
“We’re hoping this will grow to $50 million in the next year,” Dowe said.
“Having more capital through the IPO has allowed us to accelerate the growth which had been limited by our organic set-up.”