IT firms reap bitter fruit of ill-conceived choices, unrealized expectations from gov’t
About half a dozen listed information technology companies now trade in the «Under Supervision» category, facing serious losses and internal administrative problems; while the much advertised IT public sector projects that were to be subsidized through the EU’s Third Community Support Framework (CSF) investment plan and were expected to bolster the market are still in the drawers of the responsible ministries. For the first time last year, the sum of the results of listed IT firms was negative; compared to pretax profits of 210 million in 2000, they reported total losses of 4.4 million euros in 2002. Info-Quest was 13 million in the red while Ideal Group and Datamedia, the two latest additions to the «under supervision «category last week, reported losses of 18 million and 9.25 million euros respectively. LogicDis and Space Hellas (telecom systems) were also added to the list. A cursory look at the sum of equity capital reveals that shareholders in the sector lost more than 400 million euros in the last two years. The Altec group, a prominent player, is now also facing problems, having been – at least temporarily – denied a certificate of transparency by the National Radio Television Council (ESR) that would enable them to undertake public contracts, after its two basic shareholders, Thanassis Athanasoulis and Giorgos Valsamidis, were accused by publisher Giorgos Kouris of having media interests. ESR is now waiting for Kouris’s testimony. Most listed IT firms seem to have lost the game after failing to invest the millions of euros raised on the bourse three or four years ago in know-how and company organization. On the contrary, as Info-Quest’s Theodoros Fessas said recently, they invested in acquisitions, angling for capital gains. Now they are at loggerheads with several of the partners of that era, losing crucial ground in the development of technology. Several software firms have preferred to focus on distribution of foreign products. Even CSF projects would be difficult to undertake, especially for some that would be required to lay out some finance initially themselves and then be paid. LogicDis, which reported losses of 9.3 million last year, claimed on Friday that the negative result was due to the fall in the value of holdings and provisions for bad debts, adding that ongoing reorganization would allow it to return to profitability in 2003. Space Hellas, which announced losses of 4.38 million euros, is a characteristic example of a firm that banked on the big CSF projects that never came. Its financial statements show that the firm does not have high liabilities but that it laid out big sums on staff in preparation for CSF. Market pundits now note «it would be difficult to find the specialized staff again and the cost of re-hiring them would be much higher. The firm noted that the value of signed contracts came to 6 million euros in the January-September period. Datamedia said of its 9.25 million euro losses, 44 percent was due to various provisions, mainly concerning prior financial years, and that sales will improve by at least 20 percent in 2003. Meanwhile, bank borrowing will fall 40 percent through the liquidation of holdings that have not yielded results.
