Advantage Group: sizzling result - and a lawsuit

Advantage Group's celebration of a 256% jump in profits yesterday was tempered by the revelation that it is being sued for trademark infringement.

Advantage Group's celebration of a 256% jump in profits yesterday was tempered by the revelation that it is being sued for trademark infringement.

Palmerston North-based Advantage Computers confirmed that it is involved in litigation against the Auckland-based listed company and two of its subsidiaries.

Ad vantage Computers supplies IT goods and services nationwide and operates a Website at http://www.advantage.co.nz . It claims e-commerce generated sales of more than $400,000 monthly.

Advantage Computers is also the registered proprietor of the trade mark "Advantage" in two classes of the Trade Marks Register for computer hardware and software and computer services.

Chief executive Mark Ward says Advantage Computers has been using the name and trade mark Advantage since the mid-1980s and applied to register its trade mark in 1992.

Ward says the company has been compelled to protect its intellectual property and the value of its brands - originally initiating legal action in the Auckland High Court in November. Its Advantage brand is one of its most valuable assets he says.

"We also have a responsibility to try and avoid confusion in the market," says Ward. "As a result of Advantage Group’s recent acquisitions and its focus change, Advantage Computers was seeing more and more confusion, which does not do us or Advantage Group Limited any good."

That focus change - away from its traditional Eft-Pos lines and towards e-commerce - continues to work for Advantage Group, which yesterday announced profits for the six months ended December 31, 1999 of $3.67 million, up 256% on the same period last year, and 20% on the company's initial profit forecast in December.

The result also contained a $700,000 provision for the trademark dispute.

Advantage shares finished yesterday at $4.74, up 14 cents. The company this week fielded a please-explain letter from the New Zealand Stock Exchange after its shares surged last week, but was unable to explain the rise.

"Advantage is a rarity amongst e-commerce companies: we're profitable," said Advantage CEO, Greg Cross yesterday. "We're a new-economy company and ours is a growth story, but we're delivering the type of profits that you'd expect from a more traditional company. In other words, we're a real business with real operations, real people and real customers.

"That hasn't gone unnoticed," said Cross. "The first six months of the current financial year have witnessed increased institutional interest in Advantage, culminating in the purchase of shares in Advantage by Soros Quantum Fund and Kingdon Capital Fund. These investments reflect a growing recognition of the company's capabilities and performance relative to US e-commerce companies, and of our potential within the Asia Pacific region.

"Our investments in FlyingPig.co.nz and Strathmore Group will remain long-term holds," added Cross, "The latter has already delivered a substantial return."

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