Strong dollar drags Endace into the red

High dollar inflates operating costs in New Zealand for London listed network probe developer

Auckland-based networking technology developer Endace has reported a first-half loss as the high New Zealand dollar accentuated local costs against international revenues.

London Stock Exchange-listed Endace reported a small loss of US$11,000 off US$13.8 million revenue, slightly ahead of the same period last year, for the half year ended September.

CEO Mike Riley was upbeat about the result, saying the company has reiterated its guidance, which forecasts sales of US$36 million, for the full year. That’s a 20 percent improvement over the year to March 2009.

The negative for the period is operating costs. “When the profit and loss is reported in US dollars, New Zealand operating costs are higher and that lowers profitability,” Riley says.

However, he does not see why a volatile New Zealand dollar should be seen as a disruptive factor for high-tech businesses such as Endace.

That seems at odds with remarks from Endace’s founder Selwyn Pellett on his induction into the New Zealand High-Tech Hall of Fame last week (see page 3). Pellett said it was much harder to build innovative businesses now than when the Kiwi dollar was at a more favourable rate.

Riley says stronger controls on costs would have been to the detriment of growth. Endace’s investment in R&D has continued.

High value Ninja Probe systems are now outselling DAG network cards — components — for the first time. That systems business has been growing at 75 percent a year, he says.

Last week, Endace’s market capitalisation stood at $84 million.

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