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Ructions At Engin Signal Changing Strategy |
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Written by Adam Gosling
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Friday, 23 November 2007 |
With
the 30 per cent acquisition of pure play VoIP service provider, Engin,
by the Seven Network, it was only a matter of time before major
upheaval filtered its way to the broadband telephony provider's staff.
According
to media reports the company has axed anywhere from 13 to 29 staff
including the company's Marketing Manager and PR Manager. It has also
signalled it decision to abandon plans to offer a bundled VoIP, TV,
Data service using naked DSL wholesaled from Optus.
According
to one report by The Australian Financial Review, Executive
Chairman Neil Gamble said there were a total of 13 staff axed from
operational areas and the company is now focusing on the opportunities
arising from Seven's acquisition of wireless broadband carrier,
Unwired. He alsoadmitted this was not the end of the cuts and signalled that more were on the way.
Crucial
to the announcement was a statement made by the Managing Director of
its external PR consultancy Graham White of Howorth Communications who
told one media outlet that: "Engin
has realigned its workforce to
better meet its objectives of achieving profitability in the short
term". This is the first time the market-leading start-up has show any
indication of a need to reach profitability in the fledgling market.
According to sources, the directive to slash spending came from the
board level and has resulted in major cuts to Engin's marketing spend
as well as the staff redundancies, said a report by insider Tech media site MediaConnect.
The Engin board is heavily populated
by Seven Network appointments following the 34 per cent acquisition of
the company a year ago.Neil Gamble, an Engin Director since
1999, has been Executive Chairman since August when Will Jephcott
announced his retirement as Chairman.
At the same time, the architect
for Engin's transformation into a VoIP service provider, Ilkka Tales,
was sidelined and it was announced that the appointment(made only a month before)
of UK-telco executive Max Alexander to take over as CEO was suddenly no
longer going ahead and the company was left without clear executive
management.
The company has not formally replaced Tales and he will continue
in the role until a replacement is found said a company spokesperson, but Seven and Executive Chairman Gamble are clearly in control.
With
Seven's one third ownership it got three directors on the board, but its influence has expanded with the addition of Ian Smith, the
newest memeber and immediate past CEO from Seven's other high-tech
investment Yahoo!7. The three Seven appointments are Bruce McWilliam,
Ryan Kerry Stokes and Rohan Lund. CFO Mark Zworestine (ex E-Trade) was
appointed in August when the other changes were made.
Last month, Engin obtained ASX aproval to divest itself of the Unwired shares without shareholder approval and the Bord voted to accept Seven's offer to buy Unwired's
shares if the offer reached 50 per cent. Only three Board members were independent of Seven: Neil Gamble, Ilkka Tales (who is being sidelined) and Chris Shaw, who is also leaving the company. Shaw's resignation was announced in August also, prior to
the decision to sell the Unwired stake, but before it becomes effective on 29th November.
With the exit of Shaw and ultimately Tales the VoIP provider will
have an almost exclusively Seven oriented Board with Executive Chairman
Gamble the only survivor form Engin's early days.
Engin's initial investment of 10.38 per cent Unwired share base was
at 40 cent per share - made with Seven Network's money. That
subsequently grew to 19.8 per cent all of which has now been sold off to Seven
at 45 cents per share.
Seven had promised to increase the offer to 50
cents per share if it
reached a 90 per cent holding by November 8th, but this date has passed
and
at the last notification Seven owned just 83.6 per cent still short of
the required 90 per cent for compulsory takeover.
For its trouble Engin will realise a A$4 million profit after it pays
back the money it borrowed from Seven to buy the shares in the first
place.
Seven bought into Engin at 22 cents but its interest in
the company spiked the market price to over 30 cents about one year
ago. Engin shares have since fallen to trade at 13 cent per share
yesterday.
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