Effective product development will help Melbourne IT turnaround: CEO

Developing domain and hosting products that people want rather than pumping out offerings for the sake of it will help Melbourne IT’s (ASX: MLB) turnaround, according to CEO Martin Mercer.

Last week the company released its 2013 financial results to the ASX. For the full year 2013, the company’s small to medium business (SMB) Solutions division recorded revenues of $76.3 million, a 7 per cent decline on 2012 when Melbourne IT recorded revenue of $82.2 million.

In a statement to the ASX, Mercer said that he wants to return the SMB Solutions division to growth over the next two years.

Speaking to Computerworld Australia, Mercer said that Melbourne IT needs to “re-orientate” and develop products that it is “confident there is a market for”.

“We then need to promote the product and sell it properly,” he said. “It’s easy to say but it’s amazing how many companies don’t manage to get it right.”

Mercer added that he is “not planning” to get rid of any existing products but making the best of what Melbourne IT has in the SMB Solutions space.

“When you put Netregistry [Group] together with Melbourne IT’s existing SMB business, we have a substantial [SMB] business now.” With the acquisition of Netregistry Group in February 2014, the company has 800,000 customers.

Turning to the Enterprise Services division, he wants to change this from a dedicated hosting provider to an entity where “managed services are the lead driver for growth".

During 2013, the company’s Enterprise Services division recorded revenues of $24.5 million, a 6 per cent decline on 2012 when Melbourne IT posted revenue of $26.1 million.

In 2013, the company reported a total revenue of $103.4 million, down 5 per cent on 2012’s revenue of $108.5 million.

EBITDA was $5.8 million, down 43 per cent on 2012’s EBITDA of $10.2 million.

In August 2013, former Melbourne IT CEO Theo Hnarakis said the international head of human resources and chief legal counsel roles would be phased out as the company focuses on the domestic market. The company had previously offered IT services in the United States and Europe but decided to focus on Australia to halt a downturn in revenues.

In 2013, the company reported a 9 per cent year-on-year (YoY) revenue decrease to $51.3 million for the six months ending 30 June 2013, compared to $56.6 million for the same period in 2012.

Mercer confirmed that it is “not about to venture offshore again” any time soon.

“Our shareholders wouldn’t be supportive at this stage; we need to get Netregistry and Melbourne IT integrated. We also need to establish that we can grow market share, revenue and profit in our core business within Australia.

“If we do that, our shareholders may support something offshore but that’s not part of the plan at the moment,” he said.

Follow Hamish Barwick on Twitter: @HamishBarwick

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia


Copyright © 2014 IDG Communications, Inc.

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