Tech sector tipped to top dairy, despite dip

Fisher & Paykel Healthcare passed the $500 million. Photo / Supplied

A 15 per cent drop in Fisher & Paykel Appliances' revenue pushed the total export revenues for New Zealand's top 100 technology companies below the $5 billion mark for the past year.

But Technology Investment Network founder Greg Shanahan says the sector still has the potential to surpass dairy as the country's number one foreign exchange earner.

The sixth annual TIN100 report shows Fisher & Paykel Appliances remains our only billion-dollar company, despite its $208 million revenue haircut.

Computer services company Datacom enjoyed 10 per cent growth, maintaining its number two spot on the table at close to $700 million, and Fisher & Paykel Healthcare passed the $500 million mark to stay third.

Then comes a cluster of companies hovering at $200 million, including NDA Group, Tait Electronics and Temperzone.

In total the TIN100 companies had revenues of $6.7 billion, exports of $4.9 billion and employed 24,000 staff.

The next 100 tech-based companies had total revenues of $507 million and employed about 2900 staff.

Shanahan says the entry point for the TIN100 is now $12 million, up from $7.5 million last year. Building a world leading technology, becoming a market leader and taking it global is a long term process more suited to builders than speculators, he says.

That means most of the most successful New Zealand technology firms are private companies or ones that behave that way, who can take a long term view and reinvest profits.

On average TIN100 companies spend 6 per cent of revenue on research and development. The research and development (R&D) spend for companies in the next 100 is $1 for every $5 that comes in from sales.

Companies which have achieved leadership in their markets spend on average 9 per cent of revenue on R&D, having learned their top spot protects their margins and market momentum.

Market leaders include F&P Healthcare, health software company Orion, crystal oscillator Rakon, Weta Digital, Flotech subsidiary Greenlane Biogas - which has 30 per cent of the global market for plants which turn biogas into vehicle-quality fuel - fruit sorting specialist Compac, and Douglas Pharmaceuticals, which leads with both its acne drug Oratane and its expertise in hard-to-manufacture drugs.

TIN100

New Zealand's top 100 tech firms:
* $6.7b... Total 2010 revenues
* 24,000... Employees
* $4.9b... Value of exports, down 1 per cent

TOP TEN
* Fisher & Paykel Appliances... $1.16b revenue
* Datacom (computer services)... $667m
* Fisher & Paykel Healthcare... $503m
* NDA Group (stainless steel vessels)... $200m
* Tait Electronics... $200m (est.)
* Temperzone (air conditioners)... $163m
* Gallagher Group (electric fences)... $160m (est.)
* Douglas Pharmaceuticals... $145m
* Rakon... $144m
* Moffat (baking equipment)... $140m (est.)