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CHANNELDEX: Taking stock - Earnings in the Channel

CHANNELDEX: Taking stock - Earnings in the Channel

CommSecure Ltd

(CMS $0.16)

CommSecure is aiming to cement its position as a leader in the development of secure Internet payment gateways. Its core software technology provides a scalable platform ensuring message security over the Internet.

To date, CommSecure has adapted and commercialised its technology to support two payments applications, CommSecure Net and CommSecure Web. These applications enable businesses, banks and other large organisations to make secure payment transactions over the Internet.

Recent major assignments undertaken include the development of HSBC Hong Kong's online banking demo, general consulting for HSBC in Hong Kong and India, and Web design and system implementation work for Ausdoc. Major new clients agreeing to implement CommSecure's payments gateway include Primus Telecommunications, Phone Australia, Vivanet and W.C. Penfolds.

Revenue for the four months ended December exceeded $1.77 million. This contrasts with a total 2000 fiscal year revenue of $1.9 million. CommSecure continues to maintain a strong cash position ($9.7 million) while staff numbers have grown in the last year to more than 30.

Software/hardware

eServ Ltd

(ESV $1.05)

eServ specialises in enterprise hardware and the provision of technical services and software solutions to the telecommunications and financial services sectors. The company has completed the integration of its recent acquisitions, which have transformed it into a global company with operations in Australia, UK, US, Hong Kong and New Zealand. eServ has enjoyed the largest growth in the European business, having won new Intelligent Network (IN) software licence and implementation projects with major carriers in Denmark and Belgium.

The enterprise hardware business, which accounts for approximately 66 per cent of revenue, consists of the sale of hardware and operating software. The majority of the division's revenue is generated from the sale of Sun Microsystems workstations, servers and storage systems. eServ's software solutions business comprises the sale of third-party applications and, through G8 Labs (100 per cent), the sale of packaged telecommunications software products and custom development of telecommunications applications for third parties.

With a total of 136 people at the end of 2000, staff is expected to grow to 147 by end of June. The company continues to have no debt and a strong cash position of $10.6 million.

For the six months ending December 2000, the company reported earnings before interest, taxation, depreciation and amortisation (EBITDA) of $3.0 million on sales revenue of $21.3 million. Revenue and gross profit grew by 16 per cent and 40 per cent respectively, over the pro forma results for the same period last year. eServ's focus is now on extending market reach through the development of implementation partnerships, and on the growth of its presence and infrastructure in the US market by way of acquisition or partnership with complementary product vendors.

There are orders in place today, or anticipated shortly, for more than 70 per cent of the company's prospectus target. eServ is confident of meeting this forecast but remains cautious in the light of current telco market issues, particularly in the US, which may negatively affect the company's second-half result.

MYOB Ltd

(MYO $1.66)

In 2000, business management software provider MYOB doubled its number of active, registered customers to approximately 300,000. This increase provides the business with substantial revenue opportunity, while new sales of more than 70,000 units are expected this year.

A spike in sales forecasted to occur around the time of the lodgment of the first quarterly Business Activity Statement did not meet expectations.

The company is continuing to pursue opportunities for expansion in the US, UK, Canada, Malaysia and Hong Kong, with varying degrees of success.

MYOB expects to show a margin on earnings before interest, tax, depreciation and amortisation (EBITDA) of more than 34 per cent for the full year. This margin is slightly lower than earlier forecasts due to the softer trading conditions experienced during the second half in Australia.

The company indicates it is on track to achieve total revenue for the year 2000 of approximately $118 million, 60 per cent greater than prospectus forecasts. Consensus estimates for MYOB forecast a 199 per cent increase in net profit ($18.3 million) for the full year to December 2000, followed by a 33 per cent drop in 2001 to $12.2 million.

LookSmart Ltd

(LOK) $0.20

LookSmart offers a range of search and navigation services for Web users. The company's directory of more than 1.8 million Web sites is indexed into 170,000+ categories, providing concise descriptions of each site and reaching more than 52 million people per month.

LookSmart provides its directory to leading Internet portals and approximately 220 Internet service providers. Its potential audience is also enhanced by BTLookSmart, a joint venture with British Telecommunications, with customers throughout Asia and Europe. By providing the entire spectrum of navigation products, LookSmart has created an advertising revenue platform that encompasses volume-based search traffic as well as higher-value targeted opportunities for advertisers.

The trend in online advertising spending continues to move from untargeted to targeted advertising and from CPM (cost per thousand) to CPC (cost per click). LookSmart's business trends have moved away from traditional CPM-priced banner products towards targeting advertising and listings CPC products. And its recent restructuring to focus more on the listings opportunity is bearing fruit with recent major customer additions. Listings revenues grew 44 per cent in the fourth quarter 2000 despite a challenging market environment.

LookSmart's new marketing tool, Subsite Listings, generates leads for businesses by providing paths to commerce areas within their Web sites - directly from the search results pages of major portals, ISPs and media companies. Introduced in the third quarter of 2000, Subsite Listings have already been adopted by a number of leading online direct marketers.

Looksmart achieved full year 2000 revenues of $112.6 million (up 130 per cent). Full year 2000 cash operating losses of $37.5 million narrowed 28 per cent from the full year 1999 loss of $51.8 million. LookSmart had a balance of $98.9 million in cash and short-term investments at the end of the fourth quarter of 2000.

Speech recognition

VeCommerce

(VCM $4.00)

With VeCommerce's Natural Language Speech Recognition (NLSR) system, customers can make enquiries or carry out transactions by speaking directly to a computer via the telephone. This technology, which has been validated with voice recognition accuracy rates of up to 95 per cent, is the basis for automated call centre solutions.

The market for speech recognition and voice-enabled e-commerce is growing dramatically. According to Sydney-based independent research company callcentres.net, natural language speech recognition has penetrated less than 1 per cent of the call centre market. Callcentres.net anticipates the market for this technology will be worth $150 million over the next 12 months.

With global alliances that include Nuance, Hewlett-Packard, NEC, Genesys, Fujitsu and Intel, VeCommerce has focused on delivering solutions in five market sectors: wagering and gaming, government services, transport and ticketing, financial services and utilities. The company is currently working with a consortium of five Australian TABs to implement its NLSR system, while having also provided solutions for the Australian Taxation Office and Regent Taxis.

In late February, VeCommerce launched the country's first voice-enabled real-time credit card bill payment gateway - VePay. This gateway automates real-time credit card payments over the telephone and eliminates the need for customers to push buttons or speak to a live call centre agent.

VeCommerce's reported revenue for the half year to December 2000 was $8.2 million, up from $2.2 million the previous corresponding period. An operating loss of $113,000 was reported compared with a $1.7 million loss previously. The company is confidently expecting full-year revenues to be approximately $20 million, with a breakeven result for the year.

E-commerce

Intellect Holdings

(IHG $1.18)

Intellect has announced a successful half year to December 31, 2000, with its financial performance completing the company's turnaround to solid profitability and ongoing growth. Operating profit nearly quadrupled to $4.2 million, compared with the corresponding period last year, and revenue grew 60 per cent to $32 million. This is more than double the growth rate for the electronic payments sector. Net assets grew to $10.3 million (29 per cent of total assets) from $5.5 million at the start of the period and the balance sheet is now clear of debt.

With the order book at the end of the period standing at $63 million, it is significant that 40 per cent of these orders are for new products and services released in the previous 12 months. In addition, the home banking solution introduced in the Netherlands last year is now providing opportunities and orders in a number of key European countries.

Intellect has entered a number of new geographic markets through recently formed partnerships in the US, Germany, France and Croatia. Orders from these new partnerships are expected to be significant drivers for Intellect's ongoing revenue growth.

The outlook for the remainder of the financial year remains in line with earlier expectations of a 50 per cent revenue increase to $80 million and a doubling of operating profits to approximately $10 million.


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