KAZ boss responds to share price fall - ZDNET arti

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    Kaz shrugs off market cap crash

    By Jeanne-Vida Douglas, ZDNet Australia
    02 May 2002

    Australia’s largest IT company Kaz Computer Services lost half of its market capitalisation this week after revised earnings sent its share price into a freefall, but the company claims it can shoulder the burden.
    Focussed on business process outsourcing, Kaz became the country's largest IT company in March this year when it acquired high-end integration company Aspect Computing.

    In a recent statement to the Australian Stock Exchange, Kaz reduced its forecast revenue by AU$35 million to $211 million, with the company’s profit after tax falling $7.9 million to $18.7. The market responded by wiping over $150 million off the company’s overall value within 24 hours of the announcement.

    Despite conceding that Aspect had contributed in part to the revised figures, Kaz founder and CEO Peter Kazacos said this was largely due to a slump in hardware sales across Sydney, pointing out that the company was now sufficiently large and diversified to shoulder such glitches.

    “Aspect has a high exposure to discretionary spend in the Sydney market, but it has also been making significant progress in Canberra,” Kazacos said.

    Kazacos conceded further rationalisation of the company’s operations would result from the merger, however, he said there was little operational duplication between the companies and staff cuts would be minimal.

    “We are still in the process of integrating our operations,” Kazacos said. “The share price has no affect whatsoever on our business at the moment, we are not in a position where we need to raise investment, and we are profitable.”

    Kazacos has remained defiant in the wake of the market’s response, saying that the initial forecasts were excessively optimistic based on an encouraging start to the year.

    “December was looking very good and things were going well throughout January, so our initial forecasts were based on an expectation that the market would continue to be healthy,” Kazacos said. “These things can change very quickly, and when we didn’t get the results we were expecting in March and April we decided to revise our forecasts downward and be as conservative as possible.”

    In defence of the company’s position, Kazacos said Kaz was still on track to achieve the expected revenue of AU$409 million in 2003, and said the company was still in a phase of growth.

    “People seem to expect us to create profits and not play with them,” he said. “We have invested in some large growth initiatives, including call centres in South Australia and Western Australia, and we still have cash reserves.”

    Kazacos indicated an intention to continue to expand the company’s operations in Thailand, and ultimately ramp up its operations in the US market.

    “We are in the very early stages of entering the US market, we have won exlusive US rights to the hardware behind our cheque processing works in Thailand,” Kazacos confirmed.

    PS. ZDNET.com.au is a great IT site.

    Al Baby
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