The rush to acquire shares off Australian IT outsourcing company Kaz Computer Services' IPO was scheduled to begin this week amid calls for an Internet stock reality check from the company's managing director.
Peter Kazacos warned, less than a week before the company's IPO was due to open on February 14, that many pure-play Internet company stocks are `grossly' overvalued.
In fact, according to Kazacos, less than 1 per cent of his company's revenues for the last financial year were generated through `Internet activity'. Kaz was due to offer 80 million shares, valued at $1 per share.
At the time of going to press, Kazacos said 73 per cent of the company's revenues for this financial year were already secured, as were 54 per cent of next year's. All KCS outsourcing projects were paid for in fixed monthly payments over periods of three to six years, he said.
Kazacos competes with IBM GSA, EDS and CSC in the outsourcing market for mid-range businesses. With the money raised from the float, he believes KCS will have a good chance of winning the outsourcing contract recently tendered by Westpac. `You'd need at least a million to go after that.'
Kazacos said his company would also attempt to further its penetration into the Asian outsourcing market. As a result of Kaz's joint venture with Vanda Group, KCS already has considerable presence in Singapore, Malaysia and Hong Kong, he said.
The company would also use the extra financial resources to pursue local government outsourcing contracts, he said. KCS includes AMP, Westpac and McDonald's in its current list of clients.