Commander to shed 600 staff and 'non-core' businesses

Stuart Corner
Wednesday, 30 January 2008 15:20

IT Industry - Strategy

Amanda Lacaze, the new CEO of struggling IT and telco services company, Commander Communications, has unveiled plans to reduce staff numbers from 2000 to 1400 and shed non-core businesses. Commander has also agreed on a new debt repayment plan with its bankers which it hopes will enable it to trade out of its difficulties. The Volante IT services business, acquired in 2006 will be a key plank of the strategy. Lacaze said that "Commander, under the Volante brand, has an enviable market position in the provision of managed IT services to an impressive client list within the government and enterprise sectors...Resources will be targeted to retaining and growing current customers with particular focus on the development of strong back-end operating platforms for future growth... Under the Volante brand, Commander has a highly attractive business delivering managed IT services to government and enterprise customers."

Commander claims also that, as a locally owned and managed niche provider, it can tailor services to meet the needs of key customers in a way that larger providers are unable to emulate. It said it would continue to invest in this business, including enhancements to current platforms and delivery capability.

Lacaze has not specified exactly what businesses she will divest, but said Commander would "substantially" exit the stand alone resale of low margin [hardware] product. "Commander currently derives significant revenue, but not profit, from the simple resale of high volume, low margin IT hardware. This has created significant back end cost and complexity in the business including logistics and working capital. Commander will continue to resell IT Hardware where it is associated with the provision of professional and technical services."

For the year to 30 June 2007, Commander reported revenue of $1.1 billion: $357m from voice hardware and network services, $536m from data hardware, and $197 million from service,. Services however delivered $107m of gross margin, data hardware only $53m and voice hardware and network services $90m.