The key is not to stumble

In the year to 31 December, Keycorp grew sales only 3.5% to $126m, which hit the bottom line badly - the company recorded a $12.7m net loss after tax before abnormal items, as against a $4.8m profit the previous year. These figures are sweetened by the proceeds from the sale of Keycorp's 57% holding in Australian Electronic Manufacturing Services in December 1999, but that doesn't change the fact that Keycorp has not followed up on major opportunities and is trading at a high PER.

Leading supplier

Keycorp is the leading supplier of EFTPOS units and develops smartcard technology, software packages, peripheral units for retail businesses and provides training and consulting services.

Its future could be bright. But it has to do more - like follow up major deals. It was great that the National Australia Bank bought its Nobil Internet Gateway (the e-commerce equivalent of EFTPOS) but it needed at least one more bank to move to the Nobil system, but for months nothing has come of it.

Keycorp conservatively records its research and development costs as an expense, rather than including them as an intangible asset. The thinking behind this is that no one knows whether research will result in a viable product: if it doesn't, the loss must be written off as a large abnormal. This reveals Keycorp as a company that looks ahead, but given the silence on the major announcements front and a very high PER, we recommend you now TAKE PART PROFITS.