IT Capital poised to drop Terabyte

By ADAM GIFFORD

IT Capital is continuing to clear its decks under its new management, with web development firm Terabyte Interactive now likely to be sold

The company's chief executive, David McKee Wright, says an unnamed New Zealand bidder is doing due diligence. There is no price as yet, but the company expects an accounting loss on the sale.

IT Capital bought Terabyte from INL for $8.4 million in late 1999, a decision made by its managing director at the time, Keith Phillips, who had sold Terabyte to the news media giant two years earlier.

McKee Wright has indicated that Terabyte is close to breaking even after years of losses, but he and chief operating officer Maurice Bryham have shown little inclination to invest any time in the business.

"It is non-strategic for us, it is only selling hours," McKee Wright said.

"If this comes off, Terabyte will be better off."

Shareholders' Association chairman Bruce Sheppard said Terabyte, which had 20 staff, would be worth "asset value plus two or three hundred thousand".

An indication of how the value of web development companies has plummeted can be seen in the sale of Zivo, which has 70 staff, to TelstraSaturn in February last year.

The sale price was not revealed but it's believed TelstraSaturn paid about $1.5 million, a far cry from the $10 million the Australian listed company Liberty One paid for Zivo, then called Clearview, in August 1999.

"There is some IP [intellectual property] there, but in the main they are time sellers," Sheppard said.

IT Capital also has a 42 per cent stake in 3D screen developer Deep Video Imaging, whose long-term prospects it considers promising, and 40 per cent of Australian web tools company Golden Orb, which has been written down in the company's books.

Hamilton-based Deep Video Imaging has secured a licensing deal with Korean computer screen manufacturer GTT that could see its multi-layer display technology widely sold.

Deep Video's vice-president of worldwide sales, Hamish Macleod, said the revenue flowing from the deal would depend on demand for the screens as it would be paid on a royalty basis.

"It's our first mainstream, desktop manufacturer. Production will commence in the first half of next year."

Initially the screens would be sold into the financial services, medical and gaming markets, but the high-volume desktop market beckoned.

In May, Deep Video gained a foothold in the United States avionics and defence market with a manufacturing agreement with American Panel Corporation.

IT Capital reported a loss of $21.4 million in the last financial year.

Its shareholders will be asked on July 23 to approve a three-year management contract to Platinum Management, McKee Wright and Bryham's management company.

They will also be asked to vote on the purchase of the pair's shares in three technology start-ups - boatmaker Sealegs, electronic motor developer Conceptual Solutionz and mobile phone application company Datasquirt.