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sells Ecard (The Age)

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    ERG cashes in its share of smartcard venture
    November 15 2002
    By Eli Greenblat





    Smartcard developer ERG has walked away from its two-year joint venture with Telstra and ANZ Bank, selling its 39 per cent stake in ECard for $5 million.

    ERG said yesterday it considered the time needed for a return on its initial investment was likely to be longer than expected by shareholders.

    ERG sold the stake under a selective buyback agreement, leaving existing shareholders Telstra and ANZ each with 50 per cent of ECard.

    It is believed ERG invested as much as $10 million in ECard in June 2000. It has since written down its stake to zero, thereby booking a profit on yesterday's sale.

    Shares in ERG closed steady yesterday at 15.5 cents.


    ERG, ANZ and Telstra invested $30 million in June 2000 to create the joint venture in an attempt to stimulate the smartcard market.

    However, the venture soon struck trouble with a number of its installations, including a big delay in a smartcard project covering 450,000 New South Wales TAFE students.

    ECard also faced intense market speculation that it was suffering funding shortages and a failure to win new business.

    ECard at present provides services to customers such as ANZ Bank, TAFE NSW, La Trobe University and Smart Visit Solutions.

    An ECard spokesman said the company was not profitable at this stage, but it had several new projects and could become profitable in the near future. There was new demand for a range of smartcard products from the existing customer base, and recent publicity on electronic fraud would bolster demand.

    The reporter holds Telstra shares
 
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