Mr Greg Daniel, interim Executive Chairman was quoted in today’s ASX announcement, “it became apparent to the Board that the costs associated with building and servicing the blu portal, centralised sales force and 24/7 support had grown substantially faster than we felt was sustainable in the short term given the level of centralised sales.”

Reading between the lines, this appears to be suggesting that while the portfolio companies were performing well within their niches, the integrated, centralised organisation was making few sales on top of a high costs structure, draining the overall profitability of the organisation.  This is borne out by further comments from Mr Daniel in the announcement: “On a consolidated basis, the combined portfolio companies have grown their EBITDA, excluding the corporate overheads costs, by over 50% in the first half of FY08 over the previous corresponding period.”

In a clear indication of some heavy and rapid cost-cutting, Mr Daniel also noted that “the Board has moved decisively to reduce corporate overheads and refocus the business on the 25 portfolio companies which are growing strongly.”

Richard Webb and Ken McDonnell, along with a number of other BlueFreeway employees were previously employed by Citect Ltd, prior to and immediately after Citect’s acquisition by Schneider Electric in 2006, effectively moving to BlueFreeway as a unified management and support team.

If I was in that team, I’d be a little nervous right now!