ASX-listed Oakton has closed its products division and made 18 staff redundant to renew its focus on IT services and consulting.
The products division was responsible for the redevelopment and sale of law enforcement software originally developed for the New South Wales Police Service. The investment has not paid off for Oakton — who made one sale of the application to the South African Department of Justice in 2002 but has seen little interest elsewhere.
Oakton managing director, Paul Holyoake, said the products division had “dragged down” Oakton’s financial performance. For the half-year from July — December 2002, Oakton’s services business grew 49 per cent, earning $20 million in revenues and making a net profit of $3.9 million. Its products business weighed down these positive results however, making a loss of $700,000 on sales of only $100,000.
The closing of the products division cements Oakton’s commitment to the IT services market — after its recent acquisitions of Aston IT, mPower and Tier Consulting.
Holyoake said that margins were holding up, and customers were continuing to show interest in services such as custom development and application integration.
“IT services is a tough market, but we are tracking really well,” he said.