Mustek Electronics aims to take on the big brands, including previous business partner Compaq, in the corporate and government sectors, saying it is expecting a Gartner rating in the near future.
The JSE-listed systems manufacturer has reported sound financial year-end results and has increased PC market share to 20% with home brand Mecer computers.
Headline earnings for core businesses for the year to June increased by 9% to 88.2c and revenue increased to R1.3 billion - a jump of 25%.
Executive director Mike Hennessy says the decision taken in July to discontinue the relationship with Compaq was a timely one, as the Mecer brand gained market penetration into the government and corporate sectors.
"The barriers to entry have been overcome and our corporate sales division has already secured significant contracts with corporate and government, the most significant being the new RT222 (Central Government PC supply) tender which will realise more than R450 million in revenue over the next two years," says Hennessy.
"Added to this, we have heard from Gartner that it will rate the Mercer brand which will further decrease barriers of entry, especially to the corporate market."
Hennessy says Mustek is set on lowering the company`s gearing and will be throwing every effort into establishing the Mecer brand in the corporate market.
He adds that Mustek will not be actively pursuing any acquisitions unless they are perfect fits for the company`s core business.
"As part of the company`s effort to lower gearing, the board has decided to postpone the depositary receipts issue in Taiwan because of the lower Mustek share price and an unwillingness to dilute existing shareholders` earnings," says Hennessy.
Mustek announced in March that it would be looking at listing some of its stock on the Taiwan Stock Exchange in an effort to raise capital for research and development and its African expansion.
Hennessy says Mustek has performed well in Zimbabwe, but the company will be prudently approaching further northern expansion.
"We are being very selective on further expansion as we have a profit criteria that has to be met before we invest in any region."
Commenting on the Mustek share price, Hennessy says he expects the market to reward the company in time when investments start paying off.
The Mustek share price jumped 7.2% to trade at 225c by 10am today.
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