Spectrum Resources shifts focus from US to Europe

By ADAM GIFFORD

Software vendor Spectrum Resources has laid off its United States sales staff and turned its attention to Europe as the North American market continues its deep sleep.

The listed company, which sells utility billing software, bought software company WEL Technology, now known as Kinetiq, in the hope of a bonanza from sales as North American markets deregulated.

But deregulation disasters in California and Ontario and the US recession meant many states postponed or reversed their deregulation plans, and utilities are now concentrating on controlling costs and reducing debt.

Chief executive Gavin Mitchell told the company's annual meeting in Auckland that its two Canadian staff would keep a watching brief south of the border until the economy improved.

"The US market imploded two years ago, and it is more important to bring back costs to relaunch in the UK and Europe," Mitchell said.

He said Kinetiq had made its first sale in Britain and was looking to build on it.

One shareholder questioned why software sales brought in $649,000 last year, compared with just more than $2 million the previous year.

Mitchell said it was the nature of the business that a few sales could have a big impact on revenue.

He said shareholders should take heart in the 57 per cent increase in support and maintenance revenue to $925,010, and the 367 per cent increase in service bureau revenue to $489,594, which came mainly from a five -year outsourcing deal with Australian power company AusPower.

Last year Spectrum made a $84,165 operating profit on revenue of $3.1 million, which turned into a $319,180 loss after tax and amortisation.

Last month Kinetiq bought Demand Response, a small Wellington consulting firm which uses Kinetiq's PowerView analysis tools to advise large companies how to reduce energy use.

Mitchell said Demand Response would help Kinetiq sell software to large enterprises, so it would not be so dependent on sales to utilities.

Spectrum shares were trading yesterday for about 17c.