SolNet Mark II to record debut profit

By ADAM GIFFORD

IT services firm SolNet Solutions, formed out of the ashes of Sun Microsystems agent SolNet Holdings, says it is on track to make a profit in its first year.

Sun severed its ties with SolNet Holdings in November for "financial reasons" and filed a civil action against the company. That action is continuing.

SolNet Holdings was put into liquidation by Westpac, but not before directors had sold assets to their new company, including the name and the professional services, software development and support service capability.

A report to creditors last month is believed to have put total debt at about $16 million.

The new company hired 97 of the 125 SolNet Holdings staff, and headcount now stands at 115, including contractors.

Chief executive Mark Botherway said while there were significant start-up costs which still needed to be recovered, the company was trading profitably.

"It happened at the worst time of the year for an IT company. December and January are always the quietest months, and we had eight or nine weeks of payroll and three to five weeks of billing opportunities," Botherway said.

"We also had costs for rebranding, legals, changing all the stationary and the other things you do when you start a new company."

He said revenue for 2004 should be between $15 million and $20 million.

In its last year as a Sun agent SolNet Holdings turned over about $17 million.

Botherway said SolNet Solutions has retained most of its customers, including Accident Compensation, Qualifications Authority, Livestock Improvement Corporation, Telecom, Tourism New Zealand and Air New Zealand, and picked up new customers, including Guardian Trust and the National Library.

He said it had strengthened its relationships with other technology providers including database vendor Sybase, IBM for its middleware stack and portal products, and content management software provider Straker.

While in the past SolNet concentrated on the top 50 corporates and government agencies, Botherway said it now saw "opportunities below the top 50, particularly in Auckland".