Brocker fighting Nasdaq delisting

By PETER GRIFFIN it writer

The sweet success story of Brocker Technology has turned sour for shareholders and management alike.

Trading of the New Zealand company's shares on the Nasdaq and Toronto Stock Exchange has remained frozen for the past week as it investigates "accounting irregularities" at its Australian operations. But it faces a bigger issue.

Brocker's share price has plunged from more than $US6 ($14) a year ago to around 50USc, threatening its Nasdaq listing.

The computer hardware and software distributor is probably best known for its Bloodhound service, which allows customers to have just one phone number, regardless of where they are.

The company experienced rapid growth last year, driven in part by its $37 million acquisition of Fiji-based IT company Datec.

When Brocker listed on the Nasdaq last August, it was only the second NZ company to do so, but a major concern for its shareholders is that Brocker has slipped below the Nasdaq National Board's requirement to maintain a minimum bid price of $US1.

The company now plans a one-for-four reverse share split to boost its shares above the Nasdaq threshold.

While the investigation in Australia is believed to be centred on Brocker's computer distribution division, share trading will remain suspended until Nasdaq and Toronto Stock Exchange officials are given more detailed information.

Brocker vice-chairman Michael Ridgway has travelled to Australia to oversee operations temporarily.

Brocker's communication manager, Nigel Murphy, said Stock Exchange officials were seeking confirmation that the situation was under control and details would be released to them in the next day or two.

"Our priority is obviously to resume trading as soon as we can, so our focus is on sorting out these issues."

Mr Murphy added that once trading restarted the price would reflect the market's reaction to how the probe was handled. He said a number of factors had contributed to the share-price nose-dive.

"The global slump in the market for tech stocks, coupled with our relatively small size and low profile in North America where most of the investors are, have added to our challenges. And our operating results have not met our expectations this year," he said.

How a potential share consolidation will affect Brocker's plans to buy 25 per cent of Korea-based internet technology company Littauer Technologies also remains unclear.

Brocker would acquire a $US45 million stake in Littauer, settled by way of a private placement for new Brocker shares issued to the Littauer Group.

John Cobb, head of retail brokering at JB Were, said technology companies on the Nasdaq had suffered badly from a lack of market confidence.

"It's got to a serious stage when a company is seeking to do a share reversal, but the move is usually in the interests of shareholders," he said.

Brocker's troubles mirror those of a range of IT companies that are suffering in the aftermath of last year's "tech wreck."

Telemedia, a company that began life in Auckland and specialises in service systems that typically generate around 30 per cent of telco revenue, has slumped from a high of $A7.53 ($9.20) to around 80c.

Despite Brocker's stock exchange hiccups, the company has continued to win large IT contracts. It recently signed a five-year agreement with IBM Global Services to provide IT services for Westpac in several South Pacific islands.

Brocker has also sealed a reseller agreement with Auckland-based Rocom Wireless for the Bloodhound service.

Rocom managing director Steve Borich said Rocom was aware of the situation with Brocker's Australian operations, but they were unlikely to affect the Bloodhound deal.

"While we do not expect any significant fallout for Brocker's new Zealand operation, we will continue to monitor the situation closely."

Brocker claims it will go ahead with the share consolidation only if absolutely necessary.

Shareholders will vote on the plan in April by way of special resolution which will require a two-thirds majority. Without their support Brocker's presence on the Nasdaq could disappear.