Datacraft posts highest quarterly revenue in three years

Hardware sales remain the main source of income for the Singapore-based systems integrator, but its services business is gaining momentum.

SINGAPORE--Systems integrator Datacraft Asia has reported revenues of US$120.4 million for its third quarter ended June 30, a 34-percent jump over the same period last year.

Boosted by customer wins in the financial and banking sectors, as well as in the mobile and telecom service provider market, the latest quarter is Datacraft's highest quarterly revenue reported in three years, its CEO Bill Padfield said. The Singapore-based company also registered an after-tax profit of US$3.4 million during the quarter, up from US$1.3 million in 2004.

Padfield noted that the ASEAN and India markets performed best, contributing 30 percent and 28 percent respectively. Korea, which broke even in the first quarter, has maintained its positive contribution over the last two quarters. Investments in China have progressed, but they have not made a positive contribution.

Datacraft's strong third-quarter results were largely fueled by several large infrastructure refresher projects, he said at a media briefing on Friday. Year-on-year, hardware revenues grew 43 percent.

Its solutions portfolio, comprising infrastructure and services tailored for areas such as IP convergence, security, and data center and storage, has also gained stronger traction. According to Padfield, revenues from the solutions business accounted for 32 percent of Datacraft's total revenues for the first nine months of fiscal year 2005, an increase compared to 19 percent recorded during fiscal year 2004.

On the services front, Datacraft recorded a 19 percent jump in revenue compared to a year ago. Reporting growth across all of the company's services business units, Padfield attributed the increase in revenue contribution from services to a combination of factors. He said the company has kept a tighter rein on headcount and improved performance from both professional and training services.

Philip Chu, Datacraft's CFO, said "it would be ideal" to have the revenue contribution by the services segment eventually reach 50 percent from the current one-third. However, he maintained that Datacraft will continue to grow its hardware infrastructure business as many companies are in the process of upgrading their technology.

"We are not going to turn away good hardware margin because it contributes to the bottomline," said Chu. "We will, of course, focus on the services growth margin."

Although Chu did not say how long before the revenue contribution from services equals that of hardware, Padfield noted that Datacraft has gone into the last quarter with a backlog of US$114 million, out of which 50 percent are services projects.