Commsoft Pays $4.6m For Nz Firm

Sydney Morning Herald

Tuesday January 16, 2001

Katrina Nicholas

Telecoms monitoring group Commsoft has made its first acquisition as a listed company, spending $4.6 million to secure a stronger foothold in the customer relationship management (CRM) market.

Commsoft, which is listed on the Australian and New Zealand stock exchanges, yesterday bought Auckland's Marketing Technologies for $2.4 million in cash and $2.2 million worth of shares.

The shares will be issued in four tranches with the final two instalments, worth $1.4 million, dependent upon Marketing Technologies hitting revenue targets.

Commsoft chief operating officer Mr Rodney Martin said the buy, which adds 14 staff, guaranteed the company would meet revenue forecasts and meant it would probably need to announce an earnings upgrade.

In its 2000 prospectus, Commsoft, which listed locally last September after raising $17 million, predicted revenue for the current financial year would be $21 million. It did not make any projections for 2002 but Mr Martin said yesterday's acquisition would bring $16 million in extra revenue from Marketing Technologies next calender year.

This year Marketing Technologies is expected to generate $8 million in revenue.

Mr Martin said the deal provided Marketing Technologies with a ready-made sales force. So far, Marketing Technologies' two main products, Brain Enterprise and Brain Express both WAP and Internet-enabled call centre offerings have been sold by the company's one-man sales force, resulting in a steady annual revenue stream of $4 million for the past three years.

Brain Enterprise, a product for larger businesses, has 70 users and competes against offerings from SAP and Oracle's soon-to-be-released CRM solution. Brain Express is a product tailored for smaller companies.

If all targets are met, Marketing Technologies' seven directors will be left with a 3.3 per cent stake in Commsoft.