Olicom fends off restructure rumours
- 16 June, 1999 13:05
Olicom Australia has shrugged off mounting industry speculation that its local operation is up for a radical restructure following the exit of two key sales staff.
In fact, Claus Hansen, Olicom's Australia/New Zealand country manager, claims the company just completed its "best quarter ever" here, despite indications the company as a whole still faces financial difficulties.
"We are ramping up and we will make a few changes," Hansen said.
Some industry observers believe the company is seriously threatened by global financial difficulties, declining token ring sales - Olicom's core market - and local management and channel issues. On the management side, Olicom is in hiring mode after losing its Victorian and NSW sales managers recently.
Victorian sales manager Gary Kewish has left to join Olicom Gold Partner PowerLAN, while NSW sales manager Nick Helvagis has joined Nortel Networks.
Hansen claimed the resignations are nothing out of the ordinary, despite the fact both men resigned during the same week.
When ARN spoke with one of the former staffers, he conceded his decision to leave was "extremely unfortunate".
Meanwhile, one industry rumour suggested Olicom has some supply difficulties in the channel. "Our ability to supply is excellent right now," Hansen said in Olicom's defence.
Felix Wong, technical director with exclusive distributor APT, also pitched in to defend the company, describing its future here as "rosy".
"There are actually no problems with product fulfilment," he said. However, Wong conceded the company continues to face global financial difficulties.
According to a recent Dow Jones report, Olicom dropped 19.1 per cent on the NASDAQ when it reported 1999 sales are expected to fall below 1998 levels. The company previously expected sales growth of 15 per cent in 1999.
Olicom's financial results for the first quarter, ended March 31, revealed net sales of $US37.1 million, down 37.9 per cent compared to $59.7 million in 1998. The company's net loss for the first quarter was $5.8 million.
In a company statement, Olicom attributes declining sales to "continued price pressure and a softening of the token ring market".
"If the token ring market continues to weaken, and with the disappointing first-quarter revenue, achievement of Olicom's financial targets for full year 1999 will be more difficult," the company observed. Olicom also attributes poor sales to its attempts to bring channel inventory levels back to "normal", an activity it claims to have completed in the first quarter.
Gary Ganis, MD at Olicom reseller PowerLAN, said the company is planning to stick by Olicom as a Gold Partner despite the global financial difficulties. In fact, he believes the global finances have little effect on local market conditions.
"At the end of the day, if customers here want Olicom they are still going to want it integrated.