TMS steers into new direction

by **Cals** Sat 28 Sep 2013, 18:48

Published: Saturday September 28, 2013 MYT 12:00:00 AM
Updated: Saturday September 28, 2013 MYT 11:20:34 AM
TMS steers into new direction
BY YVONNE TAN
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Chan: ‘In the past we sold technology, now we use technology’.
CEO Chan takes a chance on business process automation to change company's fortunes.
IF ever there was a group of “bad boys” of the stock market, Internet-based solutions provider The Media Shoppe Bhd (TMS) could probably be one of them.
It’s infamous for its erratic stock behaviour and makes news which always catches the attention of the market, to say the least.
Case in point, the TMS stock price shot up to over five times – from 9 sen to 44 sen – in less than a month in January last year. Volume ballooned almost as many times.
Those massive increases attracted a flurry of attention as punters flocked in droves towards the stock, hoping for a chance to book in massive profits.
Naturally, it piqued the attention of the regulators as well.
TMS directors sold into that rally amid criticism from several quarters. It later announced that the company had decided to buy up two firms, namely Viewnet Computer System Sdn Bhd and Open Adventure Sdn Bhd for diversification and synergistic purposes.
Soon after, the stock price came off as the excitement slowly died away and TMS faded into the background.
That episode certainly didn’t do much for the reputation of the company.
If anything, it appeared to have sealed investors’ perception of the company as a mere “punter’s stock”, one short of a good, solid growth story.
Then, just this week, the TMS stock bounced back to life, reclaiming its position as one of the most heavily traded stocks on Bursa Malaysia.
In the past one week alone, the loss-making firm has seen its stock gain some 70% to 18.5 sen after StarBiz reported on Monday that it had plans to cooperate with China’s giant telco ZTE Group to fund information communication technology (ICT) projects in Malaysia, specifically in Johor.
While that deal is still under discussion and yet to materialise proper, TMS CEOChristopher Chan says the company has put in place several other organic growth plans.
“TMS has been around for 17 years, we’ve been in the red for so many years, yet we are still around, that should say something about us.”
The company was listed on Bursa Malaysia in 2004.

The early years
After many years of making mistakes that the company is still paying for, Chan says TMS has a new strategy in place.
“Our business partner passed away after a stroke in 2009.
After that, my wife and I sat down and revised and reviewed our company’s strategy and made a few changes.”
“In the past we sold technology, now we use technology – to save and make more money,” the 46-year-old tells StarBizWeek.
Chan, who describes himself as an IT geek with a degree in music founded TMS in the 1990s taking advantage of the Internet phenomenon at that time.
Together with his wife and their late partner, they started their company from a rented premise in Subang Jaya, starting off by setting up several cybercafes known as The Java Shoppe.
That foray, exciting as it was, turned out to be their first business failure.
“It was great at first but then there was always someone else with more money and a better marketing plan than us and having better, faster computers.”
In the end, they sold a few of their cyber cafes and closed down the rest.

TMS version 2.0
TMS consequently went through the works – evolving from Intranets to content management systems, knowledge management and finally now, business process automation.
Chan says that in the early days, TMS’s mistake lied in the inability to distinguish between a product and a service.
“We invested a lot of money in research and development (R&D), which we are still paying for to this day... R&D requires a long gestation time, we will never ever do that again.
“We could not monetise fast enough, a huge chunk of money was going to customising.”
“It’s like having to build the planes when you are running an airline... can you imagine the cost?”
Lessons learnt albeit the hard way, it’s a different ball game for the TMS of today.
“Those days, we built our own technology and then we implemented it for specific clients, the markets and our wallets were just not big enough!
“That’s how we stumbled.”
Now, TMS “uses” technology to make money.
Its new way of doing business is just starting to gain traction, Chan says.
An example is Joget, an open source web platform for developing workflow applications which is one of TMS’ main focus and which has been commercialised for a year now.
“We invested in a group of guys who created Joget, they are former TMS staff who wanted to strike it out on their own.
“I had this fear where it would take too long to cover our investments in them – so we have a small position in the investment but we found another venture capitalist to help fund the rest.”
What TMS does with Joget is that it takes it and makes solutions from it, duplicating those solutions thereafter for a huge clientele here and globally.
Its clients include Intel, BaoSteel, Corning Glass and BlueBird Group.
Also under its software segment, TMS is focusing on business process automation, which it considers its core business.
Business process automation, Chan says offers great opportunities for TMS especially in the E-Government segment.
“Government departments involve much documentation, you see forms everywhere, all these forms go somewhere, we help to track and store, automate them.
“The Government offers a huge opportunity for us in this area.”
To this end, TMS has already been providing information communications technology (ICT) systems to some 88 Government schools nationwide.
Chan is hopeful that the company will be able to obtain more school-related contracts as margins for this are “quite substantial.”
More contracts could potentially be a game-changer, he says and could possibly contribute to a turnaround for TMS this year.
Its experience in school ICT systems started by it developing one for an international school in Brunei. “They knew what they wanted, we built it from there...”
Apart from software, the other part of TMS’s new strategy is retail where it has nine stores in the Klang Valley selling IT hardware and gadgets.
It managed to get into retail via its acquisitions of Viewnet and Open Adventure.
“We don’t want to be 100% software, the problem with software is that earnings are lumpy... if ever let’s say the Ministry of Education (MOE) projects materialise, then suddenly we have a huge revenue with nice margins, if not we dont..
“My take on future projects from the MOE is that they are already using the system that we built, so hopefully we’ll get more.”
Chan claims that TMS has no close competitor for such projects locally.
“Globally, we had enquiries from Saudi Arabia and we are trying to do something bigger in Brunei.”
Right now, earnings from overseas are minute but Chan intends to build it up, banking on its products like Joget which it can easily duplicate for clients overseas.
Chan is hopeful that with its new strategy gaining momentum, the TMS stock would one day find its way into the hands of real investors, instead of mere punters.
TMS narrowed its losses, reporting a net loss of RM1.18 mil for its most recent quarter from a net loss of RM1.51mil for the same period a year ago.
Revenue surged to RM58.56mil from RM18.71mil before