Datacom beats the downturn

Datacom has opened a $30 million datacentre in Auckland and is set to report another year of increased revenues and profits on the back of growth in Australia.

Chief executive Greg Davidson says the recession has touched the privately-owned New Zealand firm, but no redundancies are planned.

Revenues for the year to March were up 27 per cent to $570-580 million, thanks to a 55 per cent jump in Australian sales. Staff numbers have climed to 3100.

Turnover in Australia exceeded that in New Zealand for the first time, though New Zealand still generates most of the company's profits.

Datacom is now New Zealand's second largest technology exporter after Fisher & Paykel, he says.

"Profitability has been better than budget, fuelled by outstanding growth in Australia and good wins in New Zealand.

"Most of our customers' information technology budgets are under a lot of pressure, if not their whole businesses. It means that some of the things we are being asked to do are different."

The company posted a net profit of $24.3m on revenues of $450m in the year to March 2008, after a decade of strong growth.

A survey by the State Services Commission released last month suggested Datacom had overtaken EDS to become the second largest ICT supplier to government agencies, after Telecom.

In March, it was voted best IT services provider in Australia - and the top professional services company with an annual turnover of $50m to $200m in any category - in awards sponsored by Fairfax business magazine BRW and Beaton Consulting.

Datacom is majority owned by its Wellingtonian chairman, John Holdsworth. New Zealand Post holds a 35 per cent stake.

"One of the reasons for our quiet success over a long period has been the long-term view a private board has been able to take," Mr Davidson says.

Datacom expects its Albany datacentre will enable it to offer hosting services to a new class of customer, such as the major banks.

Mr Davidson says the facility is the first large, purpose-built publicly-available datacentre built in New Zealand since the 1970s.

Chief operating officer Steve Matheson says it has been designed to efficiently accommodate modern computer equipment that can be stacked densely in racks, which also require more modern power and cooling systems.

"The facility could be full if all the sales we have on the horizon came through. In the Auckland market, there isn't another facility that offers the same levels of security and reliability."

Datacom is likely to spend another $15m on the centre over the next three or four years as it further fits it out.

The company is considering building a similar facility in Wellington, but will require "at least a couple of foundation customers – probably from government", Mr Davidson says.

Space is running out at other datacentres and no others are currently being built, he says.

The Albany datacentre was built by Fletcher Building, which was first to move equipment into the facility at Easter.

Kiwibank will also move in its computer systems.

Datacom is unlikely to take advantage of the downturn to buy out competitors. Mr Davidson says that is probably more trouble than it's worth.

Mr Holdsworth indicated there would be no change to the strategy of steady growth.

- © Fairfax NZ News