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Rebound tipped for listed IT companies

A REBOUND in ASX-listed IT companies has been forecast by Commonwealth Research, after two years of big losses.

The CommSec IT 100 Index, which tracks the value of Australia’s main IT, Internet and communications companies, fell by 54.0 per cent in 2001.

Notably, the sector already has started to recover. After hitting a low point on September 24, the Index rose 17.7 per cent over the remainder of the year.

Looking ahead, Commonwealth Research has forecast a 14-15 per cent gain in 2002.

It expects the recovery to be led by IT outsourcing and software companies, as both sectors have the ability to boost the productivity and profits of end-customers.

Only 13 of the top 100 IT companies achieved a positive return during 2001.

The star performer was software firm Tomato Technologies, which listed in January 2001 at 20 cents and finished the year at $1.17.

Another strong performer was outsourcing firm HPAL, whose share price rose 60.6 per cent over the year to $2.20.

Commonwealth Research commented that demand for HPAL’s services, particularly document imaging, could increase after the September 11 terrorist attacks.

Perth-based ERG remained the second largest company in the CommSec IT 100 Index, despite suffering a 79 per cent fall in price to 55 cents.

Its market capitalisation at year’s end was $467 million, second only to Kaz Computer Services, which was valued at $610 million.

Reviewing last year’s market weakness, Commonwealth Re-search noted that 2001 was the first year ever that PC sales fell.

Another problem was cutbacks in capital expenditure by telecommunications companies, which adversely affected communications equipment suppliers.

Internet companies experienced more moderate falls in 2001, down 35 per cent, after a massive 79 per cent fall in 2000.

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