September 11 attacks still stunt growth

4 Feb, 2002 06:50 AM4 mins to read

By CHRIS BARTON

Last year's growth slowdown looks set to continue this year.

Main software and hardware vendors say the cautious buyer sentiment which followed the terror attacks of September 11 is carrying through into the new year.

"Businesses have a reasonably wary eye on the future," said Microsoft New Zealand managing director Geoff Lawrie. "They're not pessimistic, but very conservative about immediate investment decisions."

He said Microsoft estimates showed that the PC market shrank between 1 and 2 per cent last year. Despite the shrinkage, the company had maintained around 20 per cent growth for the year ending June 30 and had kept that up for the next six months - helped in part by 80 per cent growth in server technologies such as SQL and 45 per cent growth in Windows servers.

But after September 11 the company had scaled back expectations for this year to between 10 and 15 per cent.

Microsoft is late to file last year's results to the Companies Office, but 20 per cent growth would give it reported revenue of about $35.4 million and an after-tax profit of about $5.6 million.

But Mr Lawrie pointed out that revenue reported to the Companies Office was calculated on the basis of a commission on sales and not actual sales.

An indication of how different that can be is seen in research company IDC's estimate of Microsoft's 1999 revenue at $75 million, when filings to the Companies Office in the same year were $26.8 million.

Like most United States subsidiaries, Microsoft does not report local results.

Hewlett-Packard's managing director, Barry Hastings, believes overall growth in the IT sector in New Zealand last year was only about 2 per cent.

He said Hewlett-Packard grew ahead of that at about 5 per cent for the year ending in October.

Based on the previous year's results, that would give the company revenue of about $268 million and after-tax profit of about $10 million.

But Mr Hastings said that last year included extraordinary costs because of the acquisition of New Zealand computer services firm CSC, which swelled Hewlett-Packard's local staff numbers to 170.

He said growth prospects this year looked "reasonably flat" - although many commercial projects now under way showed promise.

Sun Microsystems New Zealand's results for the year ending June 30 show revenue of $77.9 million - growth of under 1 per cent compared with 2000.

Profit was down to $1.1 million from $1.5 million the previous year.

The lacklustre result was partly due to a $4.5 million bad debt expense caused by the collapse of telecommunications company Telemedia last year.

Solnet managing director Mark Botherway, whose company sells on behalf of Sun Microsystems in New Zealand, said good growth in services revenue gave it revenue of over $100 million and growth of about 15 per cent. As well as selling Sun Microsystems hardware, Solnet also provides other software services.

Mr Botherway said he now expected hardware growth to be in the low teens and software services to be "single digit".

"Overall revenue is expected to grow, but not at the rates experienced over the past few years," said Mr Botherway. "People's expectations are a lot lower."

Last year was a record year for Compaq New Zealand, which recorded revenue of $323.5 million revenue and growth of 11 per cent.

"When you consider the events of the year and what happened internationally to dent confidence, to meet our long-term forecasts is very pleasing," said managing director Russell Hewitt.

He would not disclose profit figures but a 10 per cent increase on 2000 would show an after-tax profit of just under $5 million.

Having "the appropriate mix [of hardware and services] for the conditions" got Compaq through the hard times, especially in the third quarter.

He confirmed that overall growth in the IT market last year was "worse than flat" and that prospects for this year did not look much better.

Story archives: