Solution 6 announces reforms

Just two months into his term as Solution 6 CEO, Neil Gamble has announced an extensive reform of the company's various business units to bring the company into profitability next year.

Solution 6 announced a first-quarter loss of $3 million and has withdrawn its expectation for profitability this year, instead forecasting a $16 million loss. Gamble blames these losses on the dot-com stock slide since May, a lack of management accountability and failed acquisitions.

Of the 15 acquisitions Solution 6 undertook in the last 24 months, three of the most important attempts failed. Gamble believes the planned acquisitions of Elite in the US, Pegasus in the UK and Sausage Software in Australia, all of which failed, took up a sizeable amount of management time. "The company has grown too quickly and has not been able to bed down acquisitions as it should have done," he said.

Gamble compared the favourable results of three Solution 6 businesses doing well, such as its legal practice division (CMS), Alphawest and Exonet, against several that are not performing to plan, such as Infosys, Dataline and Lawpoint. He expressed concern over the fact that 80 per cent of the group's revenues came from just nine of the company's products.

In response, he has issued an ultimatum to the management of each Solution 6-held business. He now requires managers to be responsible for the bottom lines of their business units, has frozen all non-revenue creating expenditure and is considering putting those businesses that are not performing on the market.

"I expect each of these businesses to start to turn in the results we expected when we acquired them," he said. "Those businesses that cannot be turned around, or those that don't fit our core business, will be looked at with an eye to possible divestment."

Gamble expects each of these companies to be profitable by the next calendar year, but will decide the possible divestment of those that fail on a "case-by-case" basis.

The only business Gamble will continue to allow to miss profitability is the company's ASP platform business, Centrum. He replaced the business under new management two weeks ago, and with the improved management expertise gained through the acquisition of Alphawest, expects a great deal of improvement in this line of business.