NZ tech stocks a predictable joke for week's end

By PETER GRIFFIN

It's something that gives us great amusement - Friday after Friday.

The moribund stragglers that are our listed IT companies avoid putting out the latest round of bad news until they really have to - at 5.30 on a Friday afternoon, in the hope that their faxes to the country's newsrooms will arrive as the business staff head for the pub.

But little do they know that Monday is often the slowest news day, so Friday's offering gets elevated from a two-sentence brief to a four-paragraph news story to be read by grumpy shareholders heading to work on a Monday morning.

It seems these days as though the listed IT sector has slipped into a virtual coma. No one's willing yet to flick the switch completely - the bulk of them have avoided delisting - but sometimes you wonder if it wouldn't be kinder.

Take a look around. When it comes to IT, the average Kiwi punter is left with almost nothing to take a reasonable punt on.

Fading IT investment vehicle Strathmore clings on, hoping its customer loyalty programme Kachingo! will see it through. At least some investors in failed technology investment vehicle Eventures got some of their money back when Craig Heatley pulled the pin.

Commsoft came a cropper in the UK and has lost so much money it's unlikely ever to recoup its investment.

Advantage Group looked a goer for a while - until it spat out all the web-services companies it had spent millions buying and wrote down its goodwill to the tune of $60 million.

Online education specialist E-cademy went to the edge in a wrangle over ownership and is basically still sitting there.

Then there was the IT Capital debacle. The "venture catalyst" made a mint selling its investment in Exonet, but it was all downhill from there. Were it not for the company's continued investment in Deep Video Imaging it wouldn't even qualify as a tech investor.

GDC Communications, which is a cabling contractor but dabbles in software, has seen its share price more than halve in the last year.

Payments terminal maker Cadmus is a small beacon of light. Despite reporting last month a loss of $18 million, it has attracted $1 million in funding from JB Were, a rare example these days of an institutional investor even sniffing at a listed tech company.

Software of Excellence has made reasonable progress, thanks to export success in Asia.

Other than that, the only IT-ish firms to have remained stable are Telecom and Sky TV. Telecom, despite its $850 million write-down in Australia and a general rout in telecoms stocks worldwide, has weathered the storm well.

Then there is the abomination better known as the New Capital Market, a separate board set up to give small companies a cheap route to a listing on the NZSE.

Less than two years on, new NZSE boss Mark Weldon has signalled he will scrap the NCM, replacing it with some type of "junior board". Not before a handful of emerging tech companies were stung with high listing costs.

The lack of interest for anything tech in the listed world has had private firms going straight to the public in an attempt to raise money.

Christchurch electronic display developer Connexions is the most recent to come up short on a private capital raising, though many have been disappointed before it.

New Zealand's IT sector has spent the last year in survival mode, not an environment for even innovative Kiwi companies to thrive in. Where a 1c rise in share price can these days boost a company's market capitalisation by a third or more and spark a "please explain" notice from the stock exchange, the question has to be asked: When will there again be a New Zealand tech stock worth backing?