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Hosting and Web domain name registration company, Melbourne IT (ASX:MLB), has suffered a net profit after tax (NPAT) loss of 16 per cent in its 2011 financial year.

NPAT was at $13.5 million, down from $16.1 million in financial year 2010.

Revenue dropped five per cent to $179.8 million.

Earnings before interest and tax (EBIT) plunged 11 per cent, impacted by the strong Australian dollar and $3 million transformation investment. Earnings were also affected by instability in the European economy since the company has operations in that region.

Melbourne IT embarked on a country-wide transformation project in 2010 after completing a number of acquisitions. The object was to integrate the acquired business, including disparate IT systems, into Melbourne IT and growth revenue as a result.

The project is entering its final year of implementation.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was down 13 per cent to $25 million.

Operating cashflow was, however, up two per cent to $19.1 million.

Melbourne IT CEO, Theo Hnarakis, said the losses matched projections from last year and is optimistic about the future.

“With enormous confidence, we believe we’ve managed to deal with the various challenges and positioned Melbourne IT for future growth,” he said. “We’ve probably had our two hardest years behind us and looking ahead we think there’s some great success ahead of us.”

While the first half of the year was challenging for Melbourne IT, Hnarakis said there was a significant rebound in the second half. He expected the rebound to continue into the company’s 2012 financial year.

In terms of revenue in each business unit, digital brand services remained steady and actually grew by eight per cent to $55.3 million.

Enterprise services, on the other hand, dropped 15 per cent to $26.8 million. The company blamed this on absence of larger project contracts in 2011 but it managed to stave off further losses by refocusing efforts on annuity revenue in the second half of its financial year.

Hnarakis said, while the results are fairly average this time around, his company has invested heavily into that division, which is expected to have double digit growth in revenue and profit.

As traditional businesses begin to seriously invest in online strategies, Melbourne IT is expecting significant opportunities to emerge.

The company is also looking forward to getting a slice of a multi-billion dollar market as the Internet Corporation for Assigned Names and Numbers (ICANN) lifts restrictions on top-level domain names in 2013.

It is currently sitting on 120 applications for .brand domain names to the ICAAN. Melbourne IT charges between $50,000 to $100,000 processing fee per application. The company expect more applications to roll in before the close date.

Melbourne IT’s SMB and reseller program, global partners solutions, segment was down nine per cent in revenue to $89.4 million. Within that division, domain registration revenue was down 13 per cent to $54 million.

Hnarakis said the company is still committed to the partner model but it does have plans to initiate a strong direct selling strategy which would be detrimental to the revenue of its channel partner.

As a way to turn the tides, Melbourne IT is looking to expand into emerging markets with new partners already signed in the Philippines and India.

The company noted IT services revenue continued to grow with services and consulting making up 63 per cent of revenue in its 2011 financial year.

Net debt for Melbourne IT is at $21.2 million.

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Updated: Melbourne IT profit down 16 per cent

Internet domain name manager Melbourne IT says it is well-positioned for the future despite a fall in annual profit.

Melbourne IT on Tuesday booked a net profit of $13.5 million for the 2011 calendar year, down 16 per cent on 2010's profit of $16.1 million.

The company said the 2011 annual result was in line with its market guidance provided in August, which predicted a stronger second half.

"2011 was one of our most challenging years yet, as we were not only dealing with further unfavourable foreign exchange headwinds and continued difficult global trading conditions but also making significant investments in system transformation where the benefits are not scheduled to flow until 2012," Melbourne IT chief executive, Theo Hnarakis, said in a statement.

"Despite the negative impact of a strong Australian dollar on our financial growth, Melbourne IT is positioned well for 2012 and beyond.

"We made solid progress in our systems transformation project, and invested heavily in new product and service development, which support our belief that 2012 will see a return to profit growth."

Hnarakis said adverse foreign exchange movements had cut earnings before interest and tax (EBIT) by $2.5 million in 2011.

Melbourne IT said its global leadership position on new ".brand" top-level domain names had boosted the 2011 result.

"The company expects the ".brand" opportunity to drive significant revenue growth again in 2012 and beyond."

Hnarakis said Melbourne IT's EBIT was expected to rise by at least 10 per cent in 2012 assuming that the Australian dollar exchange rate remained at current levels.

Melbourne IT's revenue for 2011 fell five per cent to $179.8 million, from $189.9 million in 2010.

The company declared a final dividend of eight cents per share, in line with the final dividend one year earlier.

Shares in Melbourne IT were seven cents higher at $1.51 at 1108 AEDT on Tuesday.

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Melbourne IT FY profit down 16%

27-05-2011 16:58 bit.ly - Most budding internet entrepreneurs are looking for that perfect business opportunity to make a lot of money online. Buying and selling domain names is a great opportunity to do just that. Finding a good domain name can be like finding a million dollar home that has been foreclosed and is now selling for $50000. It can be a great investment. But for many people just starting out in this business, there are a handful of mistakes that just about everyone makes. Some of these mistakes are minor and can cut into profit potential, while others can put you behind bars. No joke. In this article I reveal these common mistakes and how to avoid them. 1. Avoid These Domains at All Costs! While good domain names can be hard to come buy, do not make the mistake of buying a domain name that contains a lot of dashes. For example, [www.dog-training-tips.com]. While this might be a reasonable site you use if you are developing it yourself, the resale value of the domain itself is going to be minimal. Google recognizes domains with lots of dashes as lacking the authority of domains without dashes. This greatly effects the search engine optimization capabilities of this domain. It is best to avoid domain names with even one dash, as it is likely to drastically cut into resale value. 2. Find Domain Names With Less Than 20 Characters I use 20 characters as a rule of thumb, though this number is not set in stone. Generally speaking, domain names that have high value are going to be ...

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Domaining Power Course Lesson #3 - Domain Name Appraisals - Video

It's been a tough decade for venture capital, which has been especially hard on the biotechs and medical IT firms that sometimes have to go long years before turning a profit. But the most successful VCs can often point you to winning stocks in tadpole form.

Cardinal Partners, a health care-focused VC firm founded in 1996, has survived by handpicking a small number of early-stage companies. Its most familiar progeny to IBD readers might be Athenahealth (NASDAQ:ATHN - News), a provider of back-office clinical services that has returned 15 times Cardinal's initial investment.

Cardinal co-founder Brandon Hull recently spoke with IBD about what kinds of medical technology he's putting his money on.

IBD: How do you choose which companies to invest in

Hull: Prong one of what it takes to be successful in this business is really exhaustive domain knowledge. We immerse ourselves in these industries.

We invest across the entire spectrum of the medical economy — everything from health care information systems to biotechnology and life sciences to medical products and devices. Each of those sectors has had its season throughout our existence, as business cycles have ebbed and flowed.

At the moment, health care information systems is having explosive growth as health care begins to discover some of the efficiency and process-automation benefits you get from investment in systems.

We used to say the problem with health care isn't that it hasn't invested enough money in software. The problem is that their work flows and business processes are so screwed up that if you automate that, you'll just make mistakes faster. So we're at a seminal moment in the history of American health care, where the equation that has been promulgated, with its requirements for almost universal access, lower cost and higher quality, is fundamentally unsolvable without a major investment in IT and systems. These are the types of productivity gains that manufacturing and financial services and logistics all realized starting in the '70s, but health care is going to have to embrace these technologies, and it's going to have to do it really fast.

I would predict within the investment span of our next fund, this will be the lion's share of what we do.

It's many different subcategories. It's work flow and process automation, it's how we address the changing relationships of insurance companies and hospitals and doctors, and then it's how we respond to the emerging power of the patient behaving for the first time as a consumer. Those three categories alone could keep us busy for a decade.

IBD: What other areas interest you

Hull: The boundaries between different investment categories are blurring.

From the outset, we have done some medical-device and medical-instrument investing. But in recent years, what's interesting about devices and instruments is the degree to which they have begun to segue and merge with information technology.

So many implantable devices today have an IT component so they can do real-time patient monitoring. The whole category of devices that help people manage chronic care are getting a huge boost from handheld and remote telemetry that allows patients to manage conditions like diabetes or asthma better.

So medical devices is an area we'll continue to emphasize, although the FDA is currently having a very bad mood.

Our focus will be on those devices which either don't require FDA approval or do have heavy reliance on IT infrastructure.

Brandon HullCardinal PartnersCo-founder51 years old

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Health Care Turning To IT Info Systems

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Our footy experts preview the new rules, new coaches and new players for this weekend's opening round of the NAB Cup.

The Australian Football League (AFL) is looking to establish a bigger presence on the internet and has applied for a new top-level domain ".afl".

The global governing body for domain names, the Internet Corporation for Assigned Names and Numbers (ICANN), in June 2011 approved the expansion of domain names beyond ".com" to ".anything".

The application period for the new suffixes opened in mid-January 2012 and closes in April 2012.

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It costs $US185,000 ($A173,578) to apply to ICANN for a new suffix.

AFL general manager of strategy and marketing Andrew Catterall said that a specific AFL top-level domain name would help the football code expand and protect its brand, and create new commercial opportunities.

It would enable AFL fans to access reliable and trusted information on games, players and clubs more easily.

Fans would be able to access content by typing into their computer, phone or other digital platform: fixtures.afl, ladder.afl or merchandise.afl.

Players and clubs could have their own sites, such as daneswan.afl or collingwood.afl.

Sponsors could have nab.afl or ten.afl.

If the site did not end in .afl, it would indicate the content was not verified or official.

"We're making long-term investment decisions across the business, building our official media capacity, building stadiums, expansion (of the code)," Catterall said.

"We weighed this (the top-level domain name) up and think it's a valid application to make to try to secure the licence for a long-term result.

"We're always vigilant about how AFL content and the AFL brand is represented online and sometimes outside of our environment."

Catterall said the potential for the .afl space was still to be fully ascertained.

"The scope of it will evolve over time. This is a multiple-year migration. It will take time. We're not rushing it," he said.

Domain registry company Melbourne IT is helping the AFL apply for the new top-level domain name, and ARI Registry Services has been chosen as the technology provider for .afl.

ARI chief executive Adrian Kinderis said having a top-level domain name was like having a lighthouse for your brand because it helped users avoid fake websites - a point well understood by banks.

"In this case, if it doesn't end in .afl, then don't go there," Mr Kinderis said.

Kinderis said he hoped that the AFL's move to apply for new top-level domain name would prompt other major organisations or companies in Australia to do the same.

He said awareness of the availability of new top-level domain names in North America was huge, but tiny in Australia.

"This is absolutely going to impact every single internet user," Kinderis said. "You can't just wave this off as fad.

"We want to ensure that Australia doesn't let this be a North American-wide web."

AAP

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AFL applies for new domain