Advantage on comeback trail after dotcom backlash

By ADAM GIFFORD

At the height of the dotcom boom, listed company Advantage Group tried to tell the market it was New Zealand's equivalent of a dotcom.

So why wasn't the share price trading at stratospheric multiples to earnings? Because we did not "get it".

But some investors did bite - and were bitten in return as the share price peaked over $5 and then slumped to a few cents as reality set in.

Overpriced acquisitions that were not properly integrated, poor project management and hype backlash caused the value of the Advantage brand to slump to 33c a share.

"Advantage got tarnished with the hype around dotcoms, though its aggregation strategy was not built around the dotcom model but around being a new-world IT company with components like e-services and web development," said chief executive Tony Bradley.

The company had made the hard decisions needed to turn around, and was positioned for sustainable growth, he said.

Some acquisitions had been sold, radical surgery performed on an Australian subsidiary, and industry veterans - "grey hairs and no-hairs" - brought in at board and management level.

Bradley came to Advantage nine months ago from Deloitte Consulting, where he was IT services director. Most of his career has been spent with NCR and AT&T in New Zealand and Southeast Asia.

Jeff Morse, brought in three months ago to head the Advantage Retail Automation division, which makes point-of-sale systems for petrol stations, is another veteran of NCR in Asia and AT&T in Canada.

The other recent arrival is former Wang New Zealand head Doug Wilson, who has given up a consulting business to lead systems integrator and software developer Aldridge Punter (APL), also known as Advantage Enterprise Solutions.

The two other Advantage Group divisions are Payment Solutions, its original Eftpos business, and Portable Technologies, which has the agency for Symbol and other wireless solutions.

Advantage made a first-half operating profit of $880,000 after a first-quarter loss, and Bradley said it was on track to stay in the black for the rest of the year. Total staffing is about 320.

The best prospects for growth are in retail automation, where Advantage has a strong presence south of the Equator but is almost invisible in the north.

Morse said that could soon change, with good prospects in Asia, where he has strong business links.

He said the company had lacked the project disciplines needed to get the next generation of the retail automation system to market, and this was being addressed.

Wilson said Advantage Enterprise Solutions would continue its efforts to expand across the Tasman.

"I see a third to half of my business coming from Australia within three years."