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RealTime IT News

Companies Stay Upbeat Despite Stock Slide

Three of Australia's newest dot coms selected what may prove to be the worst day in the past decade to list on the Australian Stock Exchange, with all three suffering relative losses.

With dire predictions forecasting a very 'Black Monday' following the plummet of the U.S. NASDAQ technology stocks on Friday, the companies went ahead with their planned listings in the face of a market which is strongly expected to follow Wall Street's lead.

Online department store Bigshop's stocks opened at AUS$0.25 (US$0.15) and fell to AUS$0.14 (US$0.084) at the end of the day's trading. It was a less dramatic story for telecommunications recruitment and information technology firm HiTech shares, which were issued at AUS$0.70 (US$0.24) each and closed at AUS$0.57 (US$0.34).

Meanwhile, paper manufacturer and marketer PaperlinX dropped AUS$0.51 (US$0.306).

Despite apparent market chaos, executives at the companies managed to remain optimistic.

HiTech's managing director Ray Hazouri said that compared to the rest of the market he felt HiTech had done well.

"Yes - our timing was atrocious, but it's not our choosing that the US technology stock market crashed on Friday. If we had to try really, really hard we couldn't have chosen a more miserable day, but again it was completely out of our control," he said.

Hazouri said that with BNP Equities as underwriters, HiTech had to go ahead with the 35 per cent company float, but that in the end the timing was "not all that bad".

"If we had listed earlier we would have been faced with a worse drop. It's better for investors that we're starting from day one in this position where it can't get any worse. From my point of view, there is definitely an upside," said Hazouri.

HiTech hopes to use the cash raised by the listing to fund acquisitions and mergers, as well as the company's long-term growth.

Hazouri said both he and investors had faith in HiTech, which is not strictly a dot com. "There is seven years profit and growth history behind HiTech," he said. "At the end of the day, people have to decide what is a profitable company and what is not. We are in the highest growth sector and we're in it for the long haul," said Hazouri.

Paperlinx chief financial officer Darryl Abotemey also preferred not to focus on the fluctuation in the short-term, but look at the day's trading as a stumbling block in the long-term growth of the company.

"You can't change the ups and downs, so we're not going to do anything different," he said. "Obviously we loomed at what happened today, but we would probably tend to take a longer term view. We have strong eight per cent yielding stock and we expect demand for our services and products to continue," said Abotemey.

Paperlinx shares, which form 18 per cent of the Amcor demerger, opened at AUS$3.36 and closed at AUS$3.15.

"It wasn't as bad as we would have expected," said Abotemey. "Obviously we did consider calling the float off, but in reality it was an Amcor decision which had been scheduled for some time. We know that the market is going to move around, you could say today may not have necessarily been a good day, but no-one could have predicted what happened last week".

Bigshop may have reason to consider today a bad day, coming off worse than both of the other companies. The e-tailer raised AUS$6 million (AUS$3.6 million) at IPO, issuing 24 million AUS$0.25 shares. Just after opening at midday, Bigshop was trading at 15 cents and closed down one cent at the end of the day.

The company currently exists without delivered earnings or profit projecti



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