Wax up to ride the high-tech tsunami

By Mark Reynolds

Between the lines

It has taken a while for the technology-investment tsunami to make its way to New Zealand shores, but the market is now starting to see a splash of high-tech opportunities.

In the last few months investors have been presented with several e-commerce, internet and data-transfer investment opportunities.

We have seen former fish-farmer New Zealand Salmon re-emerge under the control of communications company Newcall, while troubled apartment developer Habitat Group has been taken over by Australian-based electronic company e-phone.

These changes follow the transformation of Iddison, a vehicle for investment in manufacturing and goldmining in Vietnam, into technology investment group IT Capital.

This business alchemy has had an impressive impact on share values. NZ Salmon's share price has trebled, while Habitat has risen five-fold and IT Capital shares have nearly doubled post-transformation.

On top of these companies that have changed tack, the sharemarket's best performer over the past year has been a technology stock.

Advantage Group's share price has soared more than 1000 per cent on the back of a restructuring in which the company has moved from simply selling Eftpos equipment into development of a range of software packages for business-to-business and retail e-commerce enterprises.

Listed computer company Renaissance has nearly doubled its share price in the past three months, mainly due to expansion of sales on the internet. The company is looking to raise another $5 million through a cash issue.

Wellington-based investment advisory firm Morel & Co has come to market with a $20 million venture capital fund for technology investment, and Advantage Group chairman Evan Christian is contemplating a technology investment float that would raise up to $50 million.

All of these investment opportunities could prove to be successful. But as with all pioneering endeavours, it is more likely there will be some failures on the way.

In sorting out the best opportunities from the more chancy, investors might like to consider that it is not simply exposure to a growth market that will make these companies prosper. Rather, it is the ability to find a distinctive market and exploit it that will set the successful apart from the also-rans.

Companies with good business plans, solid cashflow, expert staff, sensible marketing strategies and an ability to control costs such as debt will be the successes in the technology industry - just as they are in all areas of business.

This being the case, investors should assess technology companies on the aptitude and experience of their executives, as much as on their growth forecasts. Otherwise, there is a good chance of getting swamped by a speculative wave.