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Commander Upturn On Turnaround |
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Written by Adam Gosling
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Tuesday, 11 March 2008 |
Could Commander Communications' disastrous sharemarket slide be over? Shares in the company rallied slightly today after CEO Amanda Lacaze reassured investors that the company's Turnaround Plan was on track.
In a letter to shareholders Lacaze
said Commander has made "substantial progress" toward restructuring
include the sale of two non-core assets, a reduction in headcount from
2000 to approximately 1450, debt restructuring and a move away from the
company's stand alone hardware business.
Although Lacaze was
unfortunate to report a net loss of A$245 million for the first half of
fiscal 2007-2008, by December it seems much of the company's real pain
was past, it's taken a little while for the market to regain any level
of confidence in the company's shares.
The business generated a loss of A$7 million at the EBITDA
level, but by writing off goodwill, restructuring the company's debt
burden and getting "aged" IT hardware inventory off its books has
prepared the company for a better second half.
"While the July-December 2007 period was a challenging one for Commander," wrote Lacaze
in her letter to shareholders, "the results are unsatisfactory and
reflect the Company's previous business strategy which was focused on
top-line growth."
"I am very pleased to advise that Commander's newly energised workforce
has won considerable business with new and existing customers in the
Corporate and Enterprise segments over the past two months" says the
statement." We have also seen a significant increase in franchise sales
volume and margins in our Small and Medium Business segment on the same
period last year."
During that first half the company showed a negative cash-flow of
more than A$100 million and investors had little interest in the
company driving the shares to an all-time low of A$0.97 cents. In
a cashflow
statement released to the Australian Stock Exchange four days ago, the
company revealed that outflows for January and February combined were
only A$100,000 thanks to the sale of Unitel. Working against the bean
counters was A$14 million in redundancies from the company's
downsizing.
At
the time Lacaze said: "It is a direct result of our increased focus on
cash management and collections. This result represents a significant
improvement on the first half when the business showed a negative cash
flow of A$118 for the six month period."
In addition to the
Unitel sell-off, Commander has also secured a buyer for its Enterprise
ICT business assets in Western Australia, however, this sale resulted
only in a A$30,000 cash injection from Empried which picked up the
assets, customers and planned to make offers to the Commander staff
involved in the business.
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