Cash cut as venture falls short

By PETER GRIFFIN

Little more than a year after winning a $1.6 million commitment of funding from the Government, Wellington technology joint venture Ericsson Synergy is being wound up.

Tough times in the telecommunications sector mean the developer of mobile internet platforms and applications will be bundled into its New Zealand parent, Synergy International, which will continue to work on projects with Ericsson.

But no more Government funding will be forthcoming. Ericsson Synergy has already received $355,000, mainly from Industry New Zealand but including $55,000 from the Foundation for Research, Science and Technology.

Ministers Jim Anderton, Pete Hodgson and Paul Swain announced that money in the optimistic afterglow of last year's Knowledge Wave conference.

But it came with the proviso that Ericsson Synergy would increase staff numbers over a three-year period to at least 150.

Instead, the company has trimmed jobs this year from 32 to 20. Some of those remaining staff will be offered jobs in a mobile internet unit being set up within Synergy.

Economic Development Minister Jim Anderton said the "pipeline was not closed" to Ericsson Synergy if business picked up.

"Under present circumstances it's difficult to see how they would hit their future targets. They could qualify again," he said.

Ericsson spokeswoman Alison Crosbie said the joint venture had suffered due to the market downturn.

"There's been a slowdown in sales and sales cycles due to lower investment in the telco sector."

Synergy would now concentrate on developing mobile internet software for corporate customers, an area which is experiencing some growth.

Ericsson Synergy said it had generated foreign sales worth more than $7 million since being formed 22 months ago.

The company's accounts for last year show it made a loss of $299,000 on revenue of $4.9 million.