Unrealistic expectations are being placed on IT companies by shareholders who focus on the short term rather than on strategy, panellists said at yesterday`s Technology, Communications and Entertainment Summit.
CS Holdings CEO Annette van der Laan told delegates at the conference, held in Sandton by PricewaterhouseCoopers and Merrill Lynch, that institutions also tended to focus on the short term.
"They don`t always understand strategy and the business focus. Investors need to get closer to management to understand these things," she said.
Arivia.kom CEO Zeth Malele agreed that shareholder expectations were difficult to manage. "But the more you share with stakeholders, including shareholders, the easier it is to manage what those expectations might be.
"There are long-term imperatives with which we have to balance short-term objectives. The key is communication."
Dimension Data executive chairman Jeremy Ord said South African shareholders did not necessarily have a global view, resulting in a greater need for communication.
The subject of whether IT companies have struggled to provide real returns for shareholders was also discussed.
J&J Group director Jayendra Naidoo said whether shareholders saw returns depended on whether they were short-term or long-term investors and on the timing of their investment. "People who came in two years ago are definitely losing money, but investing now has been good for us."
The panellists agreed that the IT sector was likely to experience consolidation. "There will be fewer, bigger global payers," Ord said. "Regional players could come under pressure."
Naidoo said over the next three to five years the next big successful IT company would be one with substantial black empowerment credentials, driven not by political requirements but by market pressure.
"There is a widespread perception that black empowerment companies can`t do certain things," Malele said. However, the people behind these companies had the experience of working at large global companies.
"There are situations bigger than certain black empowerment companies, but there is nothing wrong with black empowerment companies partnering to handle them."
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