The channel getsmixed financial bag

The last-minute financial results postings of several channel companies indicate fortunes have been made and squandered in 2000, with KAZ Computer Services making massive inroads into the outsourcing market, Melbourne IT only just managing to remain profitable and Pineapplehead continuing to rely on its distribution business to stay afloat.

Listed IT outsourcing company KAZ Computer Services reported a $4.4 million profit for the six months ending December 31, 2000, almost doubling it's profit in six months. These profits were based on $44.3 million in revenues (a 46 per cent improvement on the corresponding period in 1999), driven by a bag of new contracts and acquisitions.

In the last six months, KAZ won outsourcing contracts with the likes of Tenix, Arthur Anderson, Reserve Bank and David Jones, and contract renewals with Brambles and AMP. The period also saw KAZ acquire IT services and software developer Fundi Software Group, whose contributions in the three months since the purchase are included in KAZ's figures. The company recently acquired Australian Administration Services from AMP Life for $75 million. With new contracts from these acquisitions under the company's belt, it expects the six-month profit to be worth only 30 per cent of the full-year profits it will post at the end of June.

Melbourne IT also posted a profit for the 2000 calendar year, albeit a small one. The company raked in $43.3 million in revenues (a substantial improvement on the 1999 figure of $14.8 million), but its net profit after tax was little over $1.48 million. This exceeded a revised estimate issued in October that promised shareholders a result falling between a $0.5 million loss and a $1 million profit.

Melbourne IT chairman Rob Stewart said the second half of 2000 had been particularly challenging, but the company has made the right investments for a positive future.

Falling just below profitability, interactive graphics software company Pineapplehead recorded a small loss of $194,000 for the six months to December 31, kept afloat by a consistent and profitable distribution subsidiary.

Pineapplehead's distribution business (formerly Lako Vision, now Pineapplehead Distribution) recorded a $399,000 after-tax profit, up 25 per cent. In a release to the Australian Stock Exchange, the directors of the company stated they would continue to use the surplus from the distribution business to fund shortfalls in its software development business as it matures.

Photograph: Peter Kazacos, managing director Kaz Computer Servicesp