Slipping And Sliding Down The Big Pipe
Sydney Morning Herald
Thursday December 28, 2000
Katrina Nicholas talks to the chief of a broadband aspirant.
David Spence is moving into top gear.
Access1, the broadband services provider he chairs, has just held a shareholder meeting to approve the acquisition of Melbourne education and training company Didasko Software, and now he's off to America to talk voice recognition.
His enthusiasm for Access1's latest buy is commendable, given Didasko, according to the independent expert's report, has no cash and is a relatively new push for Access1 into the delivery of bundled services across broadband to the corporate market.
Access1 switched its focus from the residential to corporate sector in October after spending $1.5 million on marketing the company's direct-to-computer Olympic coverage and failing to attract a decent subscriber base.
Still, Spence, the former OzEmail chief executive who netted $20.8 million when UUNet acquired the Internet service provider last year, is confident Access1 will find its feet in 2001.
Spence said yesterday the Didasko acquisition for $1.1 million cash and 28.5 per cent of the company would mean Access1 would be cash-flow positive sooner than forecast.
Last month at Access1's annual general meeting Spence said he expected the company to turn cash-flow positive in the first quarter of 2002.
``I think, with this acquisition, we'll show that much earlier now, because Didasko is profitable and is showing big revenue growth. I'm not going to say when, but by the end of June, I expect to show the company is on the path to profitability.
``My problem is how to sustain the company and look after my shareholders between now and then."
Sustaining the company, according to Spence, will be the easy part. Access1 will have $5.9 million in cash reserves at December 31 enough to last another year and its monthly cash burn rate has fallen from November's $500,000.
Appeasing shareholders may prove more difficult. Last week shares in Access1 bottomed at a 12-month low of 10.5c and closed yesterday at 14.5c. Since March they have shed more than 93 per cent in value.
Spence, with 200,000 shares is not a large holder, but he has 3 million options, exercisable over a three-year period at between 50c and 70c. However, he has promised not to exercise any until the shares hit 60c.
``So my incentive to build this company up is to get the share price back to where I think it should be," he said.
Spence, while admitting companies ``on the leading edge of development will need to show real growth in revenues and profitability" before investor confidence returns, feels some high-tech stocks have been unfairly slammed.
``In some telecommunications companies, such as MCI Worldcom, there's been a bit of overkill.
``And business-to-business ... I don't believe that's out of fashion, I think it's going to be huge and it's happening right now."
The take-up of broadband in the Australian market is happening at a slower pace though, something Spence understandably finds ``disappointing".
``I think one reason is the cost to the end user and I think the other is that there's been a very slow deployment of the network by the network builders.
``It's a chicken and the egg scenario," he said.
© 2000 Sydney Morning Herald
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