Melbourne IT Fights the Naming Slump
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[Sydney, AUSTRALIA] In an open briefing to the ASX, Melbourne IT has refuted its critics, claiming diversified business activities will rescue the company from a slump in the registration market.
CEO Adrian Kloeden told analyst CorporateFile.com that although it depended on its registrar business unit for 72 percent of revenue and 96 percent of earnings in 1999, a dramatic slump in domain name registrations did not threaten the business.
"The dramatic slowing was in the generic top level domain (gTLD) product, for example, .com, .net, .org," said Kloeden. "INWW's product offering has recently become more diverse, with the introduction of multilingual domain names for Chinese, Japanese and Korean character sets and domain name portfolio management services. So our reliance on the traditional gTLDs is becoming less pronounced."
Melbourne IT was also successful in its bid to register the new gTLD, .biz, which it launched in conjuction with fellow registry NeuStar. Kloeden emphasised, however, that domain names would no longer form the company's focus.
"Apart from INWW, Melbourne IT also has three other operating units that have the capacity to build significant revenue and earnings and broaden the base of our registrar business."
The company has recently launched its Advanced Services Application Centre (ASAC), a joint venture with Ericsson to develop software for mobile e-commerce and for Melbourne IT's own registration business. Other business activities listed by Kloeden included the company's 35 percent-owned technology incubator business. "And there's a potential registry business, NeuLevel," he said, referring to the joint venture Melbourne IT hopes to establish to market .biz.
Kloeden claimed that his appointment as CEO (replacing Professor Peter Gerrand) had renewed the business's viability. "With the flurry of activity earlier this year in the gTLD market, Melbourne IT had lost some of its focus. I have reintroduced that focus. We can't do everything, but we can do a few things well," Kloeden said.
Melbourne IT cut staffing costs by 30 percent mid year as domain registrations slowed, a move which Kloeden said was motivated by a "growing mismatch between revenue and costs in the registrar business...A change in skill mix also came out of the review," he said.
When asked if the company would remain cash-flow positive in the short to medium term, Kloeden responded by saying the company was "in good shape" in terms of operational cash flow. "We don't need the current level of cash for our existing registrar business," he claimed. "But that cash provides opportunities for building our other businesses."
The biggest threat facing Melbourne IT locally could be the introduction of competition in registration of .com.au domain names. Kloeden confirmed that Melbourne IT will continue to register the names post-competition. "We're looking at other opportunities in the .com.au space. They include corporate domain services such as protection of a company's online trading identity, which we're in the early stage of developing with some major Australian institutions. So non-traditional relationships are being forged and we're re-defining our registrar role."