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Why Deloitte’s Should Have Read ChannelNews Before Signing Off On Dick Smith Accounts

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The Dick Smith retail chain is up for sale lock stock and barrel, following yesterday’s decision to place the consumer electronics retailer into receivership owing creditors almost $300 ?million.

Around Australia landlords who have rented space for Dick Smith or Move stores are facing massive losses if the receivers fail to provide a buyer so are hundreds of suppliers many who have tried to get stock that has not been paid for returned. 

Questions are also being asked of the Company’s auditors Deloitte who signed off the Companies accounts back in August 2014 despite their being clear information in the market that the Company was struggling due to cash flow issues. 

What suppliers want to know is why Deloitte who have had a long time relationship with Dick Smith didn’t raise red flags about refinancing problems and inventory issues.

Even back in August ChannelNews knew the Company was struggling to raise revenue and had moved to heavying suppliers to invest marketing dollars into the Company up front prior to June the 23rd.

Back in May we highlighted the fact that Dick Smith had not placed orders on vendors due to cash flow problems. 


We also pointed out back in April 2015 that Dick Smith was sacking staff, cutting costs while demanding higher CO-OP investments from retailers.


The question now is why Deloitte was not able to identify these problems when senior staff were telling ChannelNews that the Company was in serious financial difficulty. 

One person who blatantly lie to ChannelNews was Marketing Director and head of Buyer Neil Merola. On several occasions we asked Merola to respond to our questions concerning the health of the Company.
His most common line was “Who is feeding you this bullshit, trust me there is nothing to the claims” it pure fantasy on somebody’s part”.

THE AFR said that Deloitte gave Dick Smith’s 2014-15 finances a clean bill of health in August. 

Deloitte earned $338,000 for conducting the audit of what now appears to be a set of dodgy books, in addition to $103,927 for other services rendered.
On Tuesday, Dick Smith was placed into receivership by major lenders NAB and HSBC after weak sales and cash generation in the crucial Christmas trading period.

Poor inventory management is being blamed for the collapse, following a $60 million write down last November – a 20 per cent reduction in the value of Dick Smith’s stock.

The Australian has reported that there has been a mixed reaction by market observers yesterday, with several long-term criticisms about the sustainability of the business re-emerging. Others expressed shock at the quick undoing of the retailer, which had traded above $2 a share as late as August last year.

Dean Fergie, of Cyan Investment Management, said he was surprise that what appeared to have been a “reasonably solid business” six months ago had entered receivership.

“It appears there were some ?serious underlying issues that the market and potentially even the management were unaware of,” Mr Fergie said.

But he said there would be limited interest in Dick Smith’s store network from other large retailers, although its chain of Move outlets at airports could attract buyers.

“The low to mid-end home electronics market is pretty dead. Aldi and the supermarkets are coming in and JB Hi-Fi has the higher end, so they are being squeezed from both ends,” he said.

Evan Lucas, an analyst at IG Group, said any buyer of Dick Smith faced a situation where it was the market’s third player, with higher costs than JB Hi-Fi, while lacking Harvey Norman’s diversified product range.

“That’s why over the last two year’s JB Hi-Fi have diversified into home appliances, and Dick Smith has only had one option which was a high-turnover business,” Mr Lucas said.

“There’s been a lot of questions around the Dick Smith branding, the use of their own private brands, which is a major part of the inventory issue first raised in November.

Nick Abboud, the company’s chief executive, had originally forecast earnings of up to $48m, before reducing it to between $37m and $43m, and later ditching the forecast alto?gether.

That pushed the shares more than 80 per cent lower, with the company last trading at 35.5c on New Year’s Eve.

Harvey Norman chairman Gerry Harvey said it was clear that the Dick Smith business “had run its course”. He said: “Woolworths couldn’t keep it, they knew they had to get rid of it, and suddenly it goes from being worth nothing to being worth $500m, then suddenly nothing again.

“Every time a competitor disappears their opposition benefits. It won’t just be Harvey Norman, it will be JB Hi-Fi and the Good Guys as well.

Senior CE Industry Executives Exposed In Ashley Maddison Saga As New Data Dumped Online

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As more Australians find that they have been exposed in the Ashley Maddison extra-marital web site drama comes news that an even bigger dump of data has been posted online.

 Millions of personal names, addresses and emails of

those who signed up to affairs website Ashley Madison have been published online

including several executives working for mass retailers and manufacturers.

It already appears that several CE and appliance industry

executives have been looking for extra-marital love behind their partners back

including one high profile executive from a mass retailer whose name pops up on

the dumped data.

ChannelNews obtained the names of several executives in the

CE industry by typing in known email addresses.

Now how can you find out if you know someone who has been

exposed by the big dump?

A developer known as “Rufo” has created a simple

website for searching the massive database of emails that have been published

by the hackers.

The site, called ashley.cynic.al, will only reveal emails

that have been used to sign up for a profile with Ashley Madison.

It won’t reveal if the user behind the email address has

been actively using the site.

What’s more, it doesn’t reveal anything like names, credit

card details or sexual preferences that could be exposed in the second dump of

data that was released a few hours ago.

The fresh set of Ashley Maddison files have been uploaded to

a part of the internet known by some as the “dark web”.

The data dump was accompanied by a note addressed to the

infidelity dating website’s boss saying: “Hey Noel, you can admit its real

now.”

The name of one of the files indicates that it contains

nearly 14 gigabytes worth of data from the chief executive’s email account.

However, there is a problem with it.

The new upload contains a large file whose name indicates it

contain emails taken from Avid Life Media’s chief executive.

The archive in question has been compressed, and efforts to

expand it to normal size bring up an error message, “It’s in a zipped

format, and when I try to decompress the contents a message comes up saying it

won’t work,” Per Thorsheim, chief executive of cybersecurity firm God

Praksis, told the BBC.

“I can’t yet say why.”

Several security Companies have independently verified that

the archive appears to be damaged.

Other files, however, can be viewed.

Mr Thorsheim said they appeared to contain collections of

computer instructions.

“The one that I opened up – Avid.tgz – looks to me like

source code,” Mr Thorsheim said.

“I can’t say [for sure] that it’s from Ashley Madison,

but I wouldn’t be surprised if it is.”

Another security firm that has taken a cursory look at these

files highlighted the threat they could pose.

“If this turns out to be legitimate, which it in all

aspects appears to be, having full source code to these websites means that

other hacker groups now have the ability to find new flaws in Avid Life’s

websites, and further compromise them more,” wrote Dave Kennedy, chief

executive of TrustedSec, on his firm’s blog.

 

Ashley Madison’s owner, Avid Life Media, could not be

reached for comment.

 

Harvey Norman Looking To Expand Into The UK, As Gerry Praises Tony Abbott

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Gerry Harvey the Chairman of the Harman Norman retail group has said that he is looking to expand into the UK despite his Northern Ireland operation struggling.

In an interview with the UK Financial Times Harvey said that he will move into the UK market with Harvey Norman branded stores, when the Irish operation is profitable and conditions are right.

When asked about the political landscape in Australia he described former Labor Prime Ministers Kevin Rudd and Julia Gillard as “idiots while praising Prime Minister Tony Abbott as a “good bloke” but admits the public simply does not like him.

“The political system is broke,” he says. “It doesn’t matter who the leader is if you are frozen in time and your hands are tied. Social media is so strong that minority groups get a huge say,” he says.

He gives warning that Australia’s inability to pass reforms leaves its economy vulnerable.

“It’s crazy, Australia is in a situation where it is one of the most expensive countries in the world to do business and the resources boom is over,” he says.

“The one thing we know for sure is we are entering a period of uncertainty in the world that is unprecedented.”

On the question of online retailer Harvey said that the Harvey Norman online web site accounts for about 3 per cent of electrical and computer sales, he also bragged that “his” web site does a better job than any other retailer in Australia. 

“Even now the internet is hyped,” said Harvey, who likens the zealotry of some online advocates to religious cults. “If you are a manufacturer an internet company doesn’t suit you. An internet company does not display your product, it can’t upsell. But we do a better job than any of the opposition.”

Harvey even admitted that he often shoots from the mouth. 

He said “I’ve got into trouble before with journalists for being candid,” he says.

After four decades of expansion, which saw Harvey Norman grow into one of Australia’s few multinational successes, the business hit trouble in 2012 due to heavy losses in their Irish operation.

At the time Harvey Norman’s market value plummeted from a$7bn in 2007 to below a$2bn by early 2012.

At the time one rival branded Mr Harvey a “whingeing dinosaur” for failing to master internet retailing. Some commentators called on him to follow the advice of his company’s catchy “Go, Harvey” advertising jingle and leave more than a half century of retailing behind.

He said “There were people saying Harvey Norman had had its day, it was yesterday’s retailer. We’d certainly been given a kick in the arse,” says Mr Harvey, who owns almost a third of the business.

“Most businesses which face a dip like that go broke. The Ireland problem is disappearing, New Zealand is very strong and we expect Asia to improve: we are regaining our mojo,” he adds.

On the question of how long he will stay at the helm of Harvey Norman he told the Financial Times “I was talking to Rupert Murdoch the other day at a lunch and he said ‘maybe I’ll live to 100’. He actually thinks he will live to 100!” says Mr Harvey, who is an admirer of the News Corp executive chairman’s passion for managing his business in good times and bad.

 “I enjoy what I do,” he says from behind a desk piled high with spreadsheets, research reports and sales figures. “If I have to go because I’m mentally or physically f****d then maybe I’ve got to go, but I’m not going willingly, I’m going screaming,” he says.

Farina Parsons, an analyst at Morningstar, is critical of Mr Harvey’s record. “The last 18 months have been good for Harvey Norman with a housing boom in Australia helping Gerry Harvey to turn round the business. But I have a feeling this is masking underlying issues with the company,” she argues.

“He hasn’t embraced the online strategy as well as he could have. The online business is pretty poor,” she says. “Gerry and his wife Katie own 30 per cent of the equity?.?.?.?raising questions around whether it should be a listed company. It is run like a private company and it would be good to see a larger cross section of industry experience on the board.”

Optus To Slash 1,000 Jobs After Paying Over $180M For Brit Premier League Rights

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Optus who has been telling everyone how good their business is going is about to slash 1,000 jobs, secret documents have revealed.

The Singapore owned telco is looking to slash costs by over $200M according to the Australian.

Optus’ half-year results saw net profit for the six-months ending September 30 rise by 8 per cent to $426 million despite losing 44,000 mobile customers.

Optus now has 9.36 million mobile subscribers when wholesale customers are included compared to Telstra’s 16.7 million users and Vodafone Hutchison Australia’s 4.9 million, which does not include wholesale customers.
 
The move is seen as a way to protect profits as demand for mobiles slips. Questions are also being raised about the demand that Premier League Soccer will generate after Optus forked out a reported $189m bid to secure streaming rights for the English League games. The amount paid by Optus is twice what previous holder Fox Sports paid for the rights.

Last year Optus CEO Allen Lew warned that Optus’ revenues would take a major hit due to a decision by the Australian Competition and Consumer Commission to slash the amount money carriers could make from phone calls and text messages.

“In one quarter that’s a $200 million hit so that will be a big dampener on our mobile service revenue growth,” he said.

It now appears that Optus is looking to recover costs by slashing jobs. 

The Australian said that Optus has drawn up plans to slash 10 per cent of its workforce.

The Australian has obtained confidential documents from within Optus that show customer service and network roles in the telco’s consumer arm will be decimated by the cuts at a time when it is trying to win market share on the National Broadband Network and claw back territory from Telstra in the race to sign up mobile customers.

The documents, which were never intended for public disclosure and were delivered to senior Optus executives in recent weeks, set out an ambitious cost-cutting program that could see as many as 1011 staff removed from the telco’s consumer business in its next financial year, which runs from April 1 to March 31 next year, the Australian said. 

“As part of our FY17 plan, we have included $215m cost-out ?initiatives to protect profitability,” the documents say.

Dick Smith Sales Up 7.5%

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Days after announcing a move into appliances Dick Smith has announced that sales grew 7.5% in the last financial year,from $1,319.7m in 2015 vs 2014 $1,227.6m. Comp sales only grew 1% while EBITDA profits were up 7.4% to $79.8M.

Dick Smith CEO Nick Aboud said that sales had been impacted by an intentional reduction in unsupported promotions, patchy trading conditions and one less trading day in the important ‘tax-time’ June sales period.

The Company like JB Hi Fi is still struggling in New Zealand with Aboud claiming that Australia continues to stand out, achieving 21.9% EBITDA growth for the year and 30.1% EBITDA growth in the second half, resulting in an Australian EBIT margin of 5.5% for the year.”

New Zealand’s gross margin was 23.5% of sales, reflecting a more competitive market and increased promotional activity, particularly in 1H 2015.

Aboud said that the cost of doing business had decreasing 32bp to 18.7% of sales in 2015. 

Abboud said “We are pleased to have delivered another solid underlying profit performance in this our second year as a listed company”.
 
The Directors have declared a fully franked 5.0 cents per share final dividend, to be paid on 30 September 2015. Total dividends declared in 2015 of 12 cents per share, represents approximately 65% of 2015 NPAT before restructuring costs, which is consistent with the Board’s guidance of a 60-70% payout range.

Dick Smith icreased stock levels of private label products which now represent 12.5% of sales, the Company said that they are looking to achieve 15% of all sales as house branded products.

The Company also said that they now have nearly 2,000,000 members of their Mates Rates Club. 

Click to enlarge.Dick Smith now has 393 stores however this could be impacted by an exit from David Jones Stores.


More to follow.

Lenovo Throws Down The Gauntlet To Microsoft, HP And Dell

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Lenovo has officially come out and said that they have no plans to prop up sales of Microsoft’s Surface, unlike Dell and the struggling Hewlett Packard who appear to have no two in one product offering of their own to take on Lenovo.

In a statement issued to ChannelNews by Lenovo regional Marketing Director Nick Reynolds Lenovo said “Lenovo has no plans to participate as a Surface Pro reseller. We are dedicated to developing a portfolio of innovative and cutting edge products to delight users, including those who would consider Surface Pro.  

“Lenovo will continue to design and sell detachable and convertible devices. We have invested heavily in world class product development and have no plans to cede this space of the market to competitors”. 

Lenovo management believe they have a superior product offering to what Microsoft is offering with their new Surface Pro 4 which is due to be announced later this month.

Microsoft who are throwing money at mass retailers to sell their PC hardware offering recently announced partnerships with Dell and Hewlett Packard both are Companies that are under threat in Australia from a surging Lenovo the world’s #1 PC company.

Throwing down the gauntlet to their competitors Lenovo said “We plan to accelerate our sales and significantly grow our market share in this space.  You can expect to see even more exciting and innovative products announced at CES in January 2016”.


The Lenovo 2-in-1 products currently include the ThinkPad Helix (Gen 2) and the newly announced IdeaPad Miix 700 and ThinkPad Yoga 260.

Reynolds said “We have the right products and the right business model. Overall, the announcement of the Microsoft Surface Pro reseller partnership by Dell and HP helps to strengthen Lenovo’s position in the marketplace. It highlights that Microsoft, Dell, and HP must partner together to achieve something that Lenovo already offers: world class products and services and support”.


Click to enlarge



LG Scarlet TV Launch More C Grade Than A grade

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COMMENT: There are A grade celebrity launches and C grade celebrity launches but the event held last night in Sydney for the new LG Scarlet LCD TV was definitely a C grade launch attended by B grade celebrities and those paid to attend which included actress Natassia Malthe who is best known for her appearances in B grade movie flicks such as Sex & Death, Blood Suckers, and Alone in The Dark.
Also making a quick appearance were members of the Sharks NRL football team who just happen to be sponsored by LG the makers of the new Scarlet LCD TV and a host of reality TV rejects who appeared quite happy sipping warm pink champagne.


Click to enlarge

Click to enlarge
Unknown models parade on a catwalk


In a desperate attempt to reverse their declining position in the LCD TV market LG, under the direction of Warren Kim the former national merchandising manager for Telstra’s Digital, Data, IT and Fixed Line business the Korean Company is spending over $100 million dollars in an attempt to take market share away from Sony, Samsung and Panasonic in the flat screen TV market.

LG’s strategy however is flawed. Rather than be evolutionary like Sony Samsung and Panasonic LG has chosen to be revolutionary. Their strategy is wrapped around the launch of a bright red backed LCD TV called Scarlet.

Talk to any automotive marketing manager and they will tell you that red cars do not sell and even worse is their resale value.  But to convince consumers to buy a red backed TV which in 2 years time will look so dated is a massive risk.
 

In an attempt to jack up interest in their new Scarlet TV LG in their wise wisdom decided on a global tease campaign  the company made readers and TV viewers believe that a new movie starring Norwegian model and actress Natassia Scarlet Malthe and produced by David Nutter ? of the hit show “The Sopranos” ? was in the making.

From billboards and bus shelter posters to online banners, Malthe has made public appearances at film premiers around the world including last night in Sydney in support of her fictitious role, while the ad copy offered no hint of LG. Also in toe was Director David Nutter who between them they are believed to be netting in excess of $15M dollars.

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Graham Cunningham LG sales Spruikes Scarlet TV

Click to enlarge
LG sales boss spruiks Scarlet


Not making a show at the local Scarlet TV launch was Aussie actors Gary Sweet or former Home and Away star Sharni Vinson who appear in the tease trailer alongside Natassia Scarlet Malthe. Also missing was recently appointed LG Marketing Director David Brand who gave the event a pass in favour of LG marketing events in New York and Paris.

“To spend money without letting people know about our brand is really risky. But that’s the punch line of this campaign. It will change the rules of the game,” Lee Kwan-sup, vice president of LG’s Digital Display Global Brand Marketing Team, said, adding his company can’t match its bigger rivals on media spending.

“What we really want is to increase our brand recognition. Strengthening consumers’ emotional attachment to that brand is the key to long-term success,” Lee said.
 


The only problem is that the new Scarlet LCD TV is very ordinary up against some tough new offerings from Samsung, Panasonic and Sony the current market leader in the TV market.

Rather than be evolutionary LG is banking on being revolutionary and like the big budget tease flick the TV lacks any substance above and beyond what LG has offered in LCD TV’s in the past. This is the same Company that 3 years ago rolled out the Internet fridge which at the time they said would be a big hit. Today I cannot find one retailer stocking the fridge let alone a consumer owning one.

EMC Moves Further Into SMB Market

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EMC have finally consolidated a hardware software solution for SMB organisations following the purchase last year of Dantz.

EMC have introduced a new line of Insignia storage hardware and software that enable small and medium businesses of up to 20 employees to store, manage, protect, and share business information.

The EMC Insignia products are designed specifically to address SMB’s needs spanning critical information management and storage issues. Low cost the EMC Insignia products have beeneveloped to work individually, together, and with third-party software and hardware.

 In October 2004, EMC acquired Dantz Development who developed the Retrospect backup and recovery software. Since then the Company has combined the extensive SMB market knowledge acquired through Dantz with EMC’s expertise in information management and storage to create the Insignia product line.

Joe Tucci, Chairman, President, and CEO of EMC, said, “Small and medium businesses are faced with the same challenges as our enterprise customers – explosive information growth, the need to improve productivity and lower costs, and a requirement for simplicity. EMC Insignia brings EMC expertise in these areas to a new and adjacent market at appropriate price points. Our new solution enable SMBs to focus on growing their businesses rather than expending unnecessary effort to store, manage, protect, and share their information.”

Larry Zulch, Vice President and General Manager, EMC Insignia, and former CEO and co-founder of Dantz Development  will manage the EMC Insignia business. The EMC Insignia line includes the following new hardware and software products:

EMC CLARiiON AX Series disk arrays enable SMBs to consolidate and share storage efficiently among multiple computers and capitalise on the advantages of backup to disk. The combination of EMC networked storage for fibre channel or iSCSI delivers easy-to-use, highly reliable data storage at an affordable price.

EMC Storage Administrator for Exchange SMB Edition information management software works with the EMC CLARiiON AX series to simplify management of Microsoft Exchange Server data, provide fast recovery from an Exchange server failure, and make migration to Exchange Server 2003 a straightforward and streamlined process achievable in just a few hours in many cases.

EMC Retrospect gives SMBs a simple but powerful way to protect servers, 24×7 applications, desktops, and notebooks. The backup and recovery software is renowned for its ease of use, self-adjusting backup operations, accurate point-in-time restores, simplified onsite and offsite media management, and encryption of backup media with government-certified AES.

EMC RepliStor SMB Edition guards SMB’s vital information against hardware failure or site-wide disaster. The software provides easy-to-manage replication of data between two Windows computers locally or remotely across the Internet and maintains a continuously updated copy.

EMC VisualSRM SMB Edition helps businesses stay ahead of information growth and rein in costs while meeting storage needs. This storage resource management software presents a consolidated view of a company’s storage and hosts automated policies to manage it.

EMC eRoom SMB Edition brings efficiency to how employees, partners, and suppliers work together. The collaboration software provides a browser-accessed, highly secure collaborative workspace to share information, manage projects, and deliver higher-quality products and services.

“We’re seeing the IT needs of small and medium businesses mirroring those of large enterprises, but on a different scale,” said Ray Boggs, VP of SMB Research at IDC. “SMBs just don’t have the financial and IT resources to deploy the same comprehensive approaches to storage. Small and mid-size firms definitely prefer suppliers that can provide comprehensive solutions, but they also like the option of adding capabilities a la carte as needed. The EMC Insignia line of hardware and software products offers SMBs the flexibility of a complete portfolio of capabilities that work together and can be put into place when the time is right.”

Pricing and Availability
The CLARiiON AX100/i, Storage Administrator for Exchange SMB Edition, and Retrospect are available immediately from authorised EMC resellers and EMC Velocity SMB channel partners. RepliStor SMB Edition, VisualSRM SMB Edition, and eRoom SMB Edition will be available in Q1 ’06. Pricing for the CLARiiON AX100/i starts at AU$8289 / NZ$9028, Storage Administrator for Exchange SMB Edition costs AU$3006 / NZ$3274, RepliStor SMB Edition costs AU$1500 / NZ$1634 per node, VisualSRM SMB Edition starts at AU$1500 / NZ$1634, eRoom SMB Edition starts at AU$1500 / NZ$1634 for 10 users, and Retrospect starts at AU$601 / NZ$655. Available in ANZ from April 1, 2006.

Weather Resistant LCD TV

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Sanyo is set to role out a weather resistant LCD TV. Set to go on sale in the UK first Sanyo say it’s ideal for soaking up warm pommy beer and the odd tear as England get booted out of the World Cup.

The World Cup’s looming – and if you have the idea of sitting outside and watching the action, or are a pub who wants to entertain customers outside the answer is this weather-resistant, flat panel LCD TV from Sanyo – claimed to be first of it’s kind in the world. They say its great for spilt beer and the tears of Poms as they mourn yet another failure to Australia in the World Cup.

The 32″ panel is suited to both interior and exterior use and can withstand a range of weather conditions, plus harsh environments, such as dusty or humid conditions. Picture sharpness comes courtesy of the high-resolution LCD panel with high brightness level, high contrast ratio and a 176 degree viewing angle.

Aimed mainly at the corporate market with an eye on filling beer gardens and barbecues, the weather-resistant TV should be on the market in time for the World Cup. No price available as yet.

Tech Companies To Benefit From Company Tax Cut

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A Tony Abbott led Government will reduce the rate of company tax to 28.5 per cent from July 1, 2013 the Liberal Party have announced today.

Abbott claims that the $2.55 billion costing will be funded from savings already announced by the Coalition. The current company tax rate is 30 per cent.

“If there are lower taxes on companies we will have more successful companies, we will have a more prosperous economy, and that is good for every single Australian,” Abbott said.

During the past few days Treasurer Wayne Swann has accused Abbott of introducing a Woolworths/Coles Tax to fund his parental leave initiatives. Swan said that the cost of the program funded by an increase in Company Tax would hurt Australians due to a big new Liberal party Company tax.

Mr Abbott said today that this is not correct and that the Coalition would always be the low-tax party.