Smooth sailing
In an IT world run amok, one company says it's confidently weathering the storm.
Polish computer systems integrator ComputerLand (http://www.computerland.pl), which offers IT and system integration services or the packaging of hardware and software products had the strongest
financial performance among the nation's top IT companies last year in the midst of the tech market meltdown.
ComputerLand's share price grew 71.5% during 2000, the highest figure in the WIG 20, the Warsaw Stock Exchange's (http://www.wse.com.pl) blue chip index, according to Slawomir Chlon, the company's 39-year-old chief executive officer who oversees operational activities. While ComputerLand's share price is down about 32% from the beginning of the year, Chlon said the drop is not as bad as the 60, 70 or 80% share-price plummets that competitors' stocks have suffered.
Chlon's advice to competitors? Rethink and restructure their strategies to secure themselves against rough IT turbulence. Last
year, ComputerLand, which is celebrating its 10-year anniversary in Poland this month, did just that when the firm revised its management and established new areas for business development.
Instead of geographically oriented sectors, the firm switched to sector-oriented fields, with five areas of IT specializations, including banking and finance, industry, public administration, health care and telecommunications. ComputerLand is increasingly focusing on other diversified services including application service providers that deliver software via the Internet, IT outsourcing, Web hosting and the implementation of packaged e-business software solutions. Chlon estimated that outsourcing alone should supply 25-30% of the company's revenues within three years, especially with government organizations and large financial institutions, which require highly developed IT systems.
ComputerLand invested about zl. 15 million ($3.75 million) in a few new online joint ventures last year despite the dismal market sentiment for anything associated with the Internet. The three new subsidiaries were: Clinika.pl (http://www.clinka.pl), a medical portal for health care professionals, with Polska Grupa Farmaceutyczna (PGF), Poland's largest pharmaceutical distributor; Centrum Handlu Internetowego (CHI), an electronic shopping mall, with media firm Agora; and StalPortal, an online steel trading exchange, with five other companies.
Dorota Ubysz, an IT analyst at the Warsaw office of SG Securities, said ComputerLand's Internet and e-commerce investments would put pressure on the company's bottom line this year by inflating funding costs. Chlon, however, argued that the parent company would not consolidate these subsidiaries this year since they are small start-ups, so they would not affect the bottom line.
Last year, ComputerLand's strategic changes paid off. The company posted sales of zl. 466.2 million ($116 million), about a 6.7% increase from the zl. 437 million ($110 million) in 1999. Net profit was zl. 24.3 million ($6 million) in 2000, up a whopping 34% from zl. 18.1 million ($4.5 million) in 1999.
ComputerLand, which has been listed on the Warsaw Stock Exchange (WSE) since 1995, was established in 1991 with 12 employees to sell name-brand computer hardware. Since then, the company has expanded through mergers and acquisitions and diversified its activities to boost the bottom line by adding technology services, IT training and consulting services, software and systems integration for specialized sectors and Internet-related projects.
The major shareholders are Tomasz Sielicki, the company's president and first employee, who holds a 14.01% stake and the Polish pension fund Commercial Union with a 5.84% stake, according to ComputerLand. The company has international subsidiaries in Lithuania, Belarus and Russia and employs 1,450 employees, about 1,050 of whom work for the parent company.
"We are more and more a services company, and services are always needed," Chlon said. "Even a lot of companies in bad (economic) times ... are looking at how they can be more efficient. One of the places they can do quite a lot about is IT."
ComputerLand will invest zl. 170 million ($42 million) in working capital over the next two years to take on larger contracts, new business lines, Internet-related subsidiaries and new product development. The company's strategy is to continue integration projects for its five sectors, especially in the banking and finance sector where it mainly concentrates on implementing electronic systems for major Polish banks. Last year this sector accounted for 37% of the company's sales, and Chlon predicts it will be about the same in 2001.
Chlon reiterated a forecast he made earlier this year that ComputerLand would have 25% operating profit growth annually within three years. In the short term, he said the company's strategy is to have five to 10 strategic customers in each of its five industry sectors. Within five years, ComputerLand would be one of the strongest software solution and systems integrators with offices in Western Europe, he said.
