Despite reporting healthy increases in revenues and profit, Commander Communications has been savaged by the investment community for its intention to spend up big to pursue its dream of becoming an SMB VoIP service provider.

Yesterday, the company reported a strong fiscal year with revenues up 25 percent and an after tax profit of $23.6 million thanks to a strong final quarter. Revenue for the year increased to $615m, while EBITDA increased to $49.1m (up 48% YoY) excluding restructuring and managed services product enhancement costs.
The increased performance was delivered across all business segments; network, data and voice, said the company. On a reported basis EBITDA increased to $47.0m, an increase of 86% over the previous year. The exceptional EBITDA performance was achieved from growth in revenues and gross margins in all business segments, proportionally reduced expenses relating to last year’s prompt restructuring actions, high rates of bundled systems sold, continued re-signing of inertia rental customers onto term contracts and strong last quarter enterprise data sales.
However the company was punished by the market with its shares yesterday falling from $2.51 to $2.07 (18%) on news that its acquisition of iBurst wholesaler Personal Broadband would drag the company’s 2005/6 results down before becoming profitable in 2007 and plans by the company to increase capital expenditure in the coming fiscal year.
The company, which recently acquired iBurst wholesaler Personal Broadband Australia for a song announced that it needed to invest $25 million to upgrade billing and back-office systems and to enhance its fledgling network infrastructure.
The investment is designed to equip the company as a service provider with an emphasis on SMB VoIP implementations, but the increased depreciation and hit to short term future earnings has scared off investors.