Australian communications manufacturer and systems integrator Scitec Communication Systems Pty Ltd has not had a happy time of it lately. Late last year its UK subsidiary went into liquidation, costing the Australian company around UKP2.8m as the largest creditor (CI No 2,078). The liquidation followed the more orderly disbanding of a US subsidiary late last year and marked the end of an ambitous plan to expand overseas from a home market that was seen as constricting growth. In one way the plan did work: the proportion of revenue generated outside of Australia rose to around 30% to 40% of the total. Unfortunately, so did the expenses. The company’s new chief executive, Hartmut Boedefeld, explains that before the expansion, the old UK office numbered around three people. Afterwards the number was closer to 26. The old chief executive and co-founder, Moshe Yerushalmy, was ousted from the board last November when it became clear that the strategy wasn’t working. Today the company’s international business has been severely checked by the closures and revenue is back down to around 15% of the total. This is perhaps an overly bleak picture since in its home territory, the company makes much of its money as a systems integrator, whereas overseas it is solely an equipment supplier. The developments leave the company in something of a quandary. On the one hand, it acknowledges that the Australian market alone is not sufficient to sustain growth. On the other it has had its fingers burned by a too-swift international expansion. The company has began a second, much more cautious expansion into Europe. Scitec Communication Systems (EMA) Ltd takes over, in place of the now defunct Scitec Communication Systems (Europe). In place of 26 staff it has four, although it says that this is likely to double in the space of a year. Most of the creditors and suppliers of the old company have decided to work with the new according to Boedefeld, despite the fact that between them they took a UKP400,000 hit. So too have the distributors. This is important since the new strategy relies heavily on the distributors and other non-direct sales channels to make the sales. In the end, though, the company’s success will depend largely on its products. Heading up its product range is the Maxima family of intelligent bandwidth managers. Then there is the SDM Speech Data Multiplexor family, the IDM Intelligent Data Multiplexors and a range of smaller customer premises equipment such as modems which are often sold through telecomunications operators. One of the company’s strengths is that its Australian pedigree gives it experience of working with Switched Multimegabit Data Services. These are popular in the island continent, based as they are on the DBDQ 802.6 standard proposed by home team QPSX Pty Ltd. The Maxima range already boasts SMDS interfaces, and Frame Relay is promised soon, with Asynchronous Transfer Mode following on immediately. It also has some very nice speech compression technology on its side which manages to make a person recognisable despite the fact that the phone call is being squeezed into a mere 2.4Kbps. The major question is whether the slowly but surely approach to expansion will work where the full-frontal attack failed.
