The loss of two senior management staff and ongoing financial woes at Cellnet has left many in the industry questioning the Queensland-based distribution group's business model.
Its decision to axe its annual roadshow, Inov8, has also raised concerns about how it plans to present itself to the market going forward.
After nearly two years of restructuring, inventory clean-ups and staff cuts, Cellnet managing director, Adam Davenport, quit his post this month. He was replaced by the distributor's former chief financial officer, Mark Bloomer.
Davenport's departure was quickly followed by that of general sales manager, Martin Bicknell, who handed in his resignation after just eight months in the job. Industry sources suggested Cellnet's board and management team were split over how to transition from a telecommunications distributor to IT. Bicknell confirmed the direction management wanted to take differed from the board.
"When I came on-board, my job was to grow the sales and to work with the restructured team," he said. "The way the board wanted the business to go wasn't in line with what I was able to give them.
"It's a disappointing thing for me as we could see some good changes coming from the new structure. The sales team was settling in and we were starting to get some good results and achieving our quarterly sales targets." Despite the upset caused by the departure of two senior executives, Cellnet chairman, Reg Clairs, was confident the remaining management team would stay put. "We're hopeful we can stabilise this very quickly," he said. "We have got to think this through carefully as we have a lot to achieve."
Davenport was brought in to restructure Cellnet's three semi-independent divisions - IT Wholesale, Cassa and Cellnet - into one IT&T distributor. Although the structure is entrenched, the company is still facing a tough road ahead. While good progress has been made in setting the course, some industry players claim it has not yet worked out how to merge its telecoms roots with the desire to be a fully fledged IT distributor. The loss of IT personalities, Davenport and Bicknell, has only cast more doubt.
Its poor share price over recent months, coupled with the slow revenue and profit gains, have also put pressure on management to improve performance. Dicker Data sales manager, Chris Price, said it had been approached by several vendors over the last week weighing up their Cellnet relationship. Dicker has also hired an additional Queensland business development manager as a direct result of the news.
"Our initial thought was that the new warehouse we've just bought is not going to be big enough to pick up the slack," he said. "Vendors put a lot of confidence into a distributor's financial results. And if you're not getting their support, it just opens the door to other distributors." Queensland software reseller, Sundata, had a long history with IT Wholesale and now Cellnet. Executive director, Kon Kakanis, admitted its overall business with the distributor had declined.
"What Cellnet has to aspire to is being a player that works with resellers on the every day stuff - the grind and processes, logistical execution, access, etc," he said. "Other players in the market are doing a really good job of this. What I see with Cellnet is that they are struggling to understand the IT reseller market today. "Telecommunications distribution is a totally different culture - particularly against the higher IT product sets, such as servers and storage. It's a commodity gain. With IT products, it's also about ensuring they're set up right and are going to work.