Engin: We've blown $26m; we got it wrong, now give us $8.4m to keep afloat

Stuart Corner
Monday, 25 February 2008 09:02

Opinion and Analysis

Shortly afterwards it announced the appointment of seasoned UK marketing executive Matt Alexander to replace founding CEO Ilka Tales to drive its ambitious transition from VoIP to triple player. Alexander, however, never took on the job. A month later the company announced that he had backed out "due to personal circumstances".

Not that it was keen to make shareholders aware of this loss of a cornerstone of its ambitious transformation strategy: this information was buried in a statement to the ASX headed "Engin Team Changes" beneath the announcement of the departure of chairman Will Jephcott and of the departure from the board of founder and director Chris Shaw "due to the ongoing demands on his time from the expanding Direct Group that he controls."

Despite that little setback, shareholders could have been forgiven for thinking that things were going swimmingly as Engin proceeded to help Seven acquire Unwired and talk up synergies between the two businesses.

In his address to shareholders as late as 29 November 2007, the company's chairman was sounding upbeat claiming that "with appropriate funding your company is well poised to deliver on the exciting triple play strategy in market with substantial growth opportunities that can capitalise on Engin's leading position in the broadband telephony sector."

However it now appears that Engin was already well advanced with plans to largely abandon its triple play strategy, and must surely have known that a cash crunch was looming.

In a business update in January the company said a strategic review of the business had been undertaken in October and November 2007, and that an outcome of this had been to put on hold the company's ADSL2+ project and to relinquish its TiVo plans until its strategy to "provide a nearer-term path to profitability for the company's core telephony business" had been successful.

With prices for VoIP services continuing to fall and with ever more ISPs offering VoIP as part of their broadband service bundle investors might be waiting a long time.