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Eforce goes ahead with subsidiary deals despite tremors

By Chris Hutching

Thursday 20th April 2000

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Eforce managing director Mark Fulton says blame for the overdue e-bubble burst in recent days must be sheeted home to some US internet companies that hyped their share prices.

The volatility was unsettling for the sector but inevitable after the inexorable rise of US share prices, Mr Fulton said.

Eforce entered agreements to buy subsidiaries via an issue of shares to the vendors at 40c each. During the week, the share price hit lows around 25c before bounding back to 30c mid-week.

"Both the deals are still subject to due diligence. I can't tell yet what effect the market volatility will have on us.

"We have to review the cash issue which was at 25c. That might seem unattractive with the price down around these levels."

Eforce announced a couple of weeks ago an agreement to acquire international supply chain management specialist Product Sourcing International (PSI) and web development and hosting agency Imagic whose combined businesses would double the size of Eforce and provide it with first-year revenue of more than $50 million. Product Sourcing would become the biggest shareholder and its managing director of Product Sourcing International, Bill Farmer, would become Eforce's chief operating officer and be appointed to the Eforce board of directors.

Meanwhile, Mr Fulton highlighted the differences between the New Zealand and US markets, where he said there were many cowboys floating companies on a business plan and little else.

"Building an e-commerce company is like building any other company. It's a long-term strategy. We don't have a market like the US so we have to build up a community of users and offer more than one product.

"We concentrate on building a user community and we're pretty much on target to achieving our initial 50,000."

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