Melbourne IT flags $2m datacentre spend

Melbourne IT flags $2m datacentre spend

Summary: After releasing a lacklustre profit announcement today, Australian-based managed services player Melbourne IT has outed plans for datacentre investment and consolidation before the year is out.

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After releasing a lacklustre profit announcement today, Australian-based managed services player Melbourne IT has outed plans for datacentre investment and consolidation before the year is out.

In its results presentation, Melbourne IT announced a plan to expand its datacentre footprint in late 2011 to cater for "customer growth" and perhaps some consolidation of existing infrastructure.

CEO and managing director of Melbourne IT, Theo Hnarakis, told analysts on a conference call today that it didn't want to build its own datacentre, preferring to lease space from a third party.

"[Leasing space] means that we defray a significant amount of the risk and we don't have to be exposed to the peaks and troughs of [datacentre ownership]," Hnarakis said.

He added that the potential cost of the company's planned datacentre expansion activities is expected to cost between $1 million and $2 million, with most of it set to be paid upfront.

"A substantial [cost] of that would be upfront due to the connectivity and the move and everything else and then from there on it's an [operational expense], such as the cost of power and lease costs," he added.

However, Hnarakis was unable to reveal who Melbourne IT had been in negotiations with, although he hinted that it does have a preferred supplier in mind.

"We are certainly in dialogue with several parties at the moment, but we're not in a position to reveal the preferred party as yet, but suffice to say, we've got several discussions going on at the moment," he said.

Melbourne IT today reported a lower revenue for the year ending 31 December 2010 of $189.9 million, down 5 per cent from $200.1 million in the 12-month period prior.

The company blamed a slow recovery from the global financial crisis and the stronger Australian dollar for the lacklustre performance results, adding that based on 2009 foreign exchange rates, EBIT growth would have been 3 per cent.

Melbourne IT's enterprise services division, however, reported stellar growth in 2011, contributing $3.5 million to the businesses bottom line, up 59 per cent from financial year 2009.

The boost in enterprise revenue comes from its 139 new contracts signed in 2010, including the Victorian Electoral Commission, BP and Thomson Reuters, according to Melbourne IT.

Hnarakis told analysts today that he expects the growth to continue throughout 2011 under the stewardship of the newly appointed executive general manager, Peter Wright.

Melbourne IT's hosting business was not so rosy, reporting not only revenue loss due to foreign exchange rates, but also a loss of almost 2000 unique transacting customers.

The company expects to combat losses in the hosting business by launching new Exchange and Windows products to customers and a new WebCentral website by the end of quarter one.

Topics: Cloud, Enterprise 2.0, Tech Industry

Luke Hopewell

About Luke Hopewell

A fresh recruit onto the tech journalism battlefield, Luke Hopewell is eager to see some action. After a tour of duty in the belly of the Telstra beast, he is keen to report big stories on the enterprise beat. Drawing on past experience in radio, print and magazine, he plans to ask all the tough questions you want answered.

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