Editorial: A gripping page turner

Editorial: A gripping page turner

The Commander saga finally reaches its conclusion

After more than a year of effort, Commander’s receivers have finally brought the company’s story to its conclusion. McGrathNicol told ARN last week it had sold-off Commander’s final business assets and was now tying up loose ends before signing off.

It has been one hell of a ride. The Commander saga had it all – from bungled acquisitions, ballooning debts, unprofitable business operations and massive staff cuts, through to poor management, cut-throat pricing and, ultimately, unsupportable operational practices.

Receivers have spent the past year pulling the company apart and offloading whatever assets they could find buyers for. And they have been reasonably successful. Notably, ASX-listed CSG picked up the bulk of Commander’s managed services business, while M2 Telecommunications Group took its SMB telco division, franchise operations and wholesale network.

There were also some disappointments along the way. Longstanding Australian PC assembler, Ipex, dwindled into the abyss after being swallowed up by Commander in 2006. In the end, receivers were unable to find a suitor and closed the doors last November.

There was also the mysterious Commander Telecom Group, a third-party consortium set-up to takeover the company’s SMB telecoms assets, which fell apart after being unable to strike a suitable commercial arrangement with receivers.

Although the receivers’ progress dominated the news for the past year, the Commander saga was already well underway in early 2006. Its decision to snatch up Volante in a hostile takeover, after months of frustrated courtship, back in April 2006 should have warned everyone that things weren’t going to be easy. The fact that Volante’s profits fell $3.5 million to $2 million in the six months prior to Commander’s attack should have also raised a red flag.

Then there was Commander’s crippling debt and cash flow management. Prior to receivers being appointed, debt was estimated at over $300 million. At the same time, several sources told ARN the company was selling products and services at 2 or 3 per cent margin – an unsustainable business practice that would never have generated the kind of money Commander needed to pay back creditors.

Despite a massive business restructure and exit from the IT hardware resale business, new chief, Amanda Lacaze, was unable to get the company into good enough shape to appease the banks.

While Commander showed us the dark side of the IT supplier market, there was a silver lining in the cloud. Several integrators, including Data#3, Ethan Group and Datacom, picked up business after Commander vacated their part of the market. Managed services outfits such as ASG, Logica and CSG, are securing new customers every month.

In a dynamic market like IT, shake-ups are inevitable, and there are winners and losers. Commander lost out, but plenty of others are making the story work for them.

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