Smart Office

Menu

David Richards

EXCLUSIVE: Dick Smith Dying Days Financials Revealed.

by

Nick Aboud the former CEO of Dick has told Anchorage Capital executives that Dick Smith should never have been placed onto receivership.

However, the accounts exclusively obtained by ChannelNews reveal that the retailer was bleeding losses in the six months prior to December when Aboud admitted that the Company was in trouble. 

In the Six month to December Dick Smith lost $164M million before interest and tax as sales slumped 5.4 per cent to $200.1 million.

At the same time the cost of running the business soared 69 per cent to $71 million.

In October Nick Aboud and former Marketing Manager Neil Merola who has since had his mobile disconnected, openly lied about the situation at Dick Smith.


Click to enlarge
Former Dick Smith CEO NIck Aboud loved to get media attention but he failed to tell the truth.


In late October I had a face to face meeting with Aboud, I put it to him that the Company was making losses. He said “No that is not true, we are tracking okay”.
 
I also put it to him that he was struggling to pay vendors and that costs were blowing out, he said “We had some problems but that is under control”.

Neil Merola the then marketing director was even more blatant when asked about the problems that were emerging at Dick Smith.


Click to enlarge
Marketing Manager at Dick Smith Neil Merola dismissed the suggestion of losses in October as “Bullshit”. “Who is feeding you this rubbish he said.


When asked about falling profits and staff retrenchments he said “It’s all bullshit, who is feeding you this stuff. If you ever have a problem, don’t write it, about come and see me”.

Both Merola and Aboud are ex senior Myer executives.

The accounts reveal that in November Dick Smith made a loss of $60.5 million in November on sales of $85.2 million. 

The mounting losses and a lack of faith in the management of Dick Smith resulted in both the National Australia Bank and HSBC calling in the receivers in January. 

Last week the banks knocked back a $70M offer by the Chinese retail group 5 Star.

Ferrier Hodgson recommended that the offer be taken up by the banks.

The banks claim that there were too many conditions associated with the offer and immediately placed the Company into administration. 

Another consideration was that Dick Smith only had $31.2 million in cash at the end of December and this was fast running out as the Company failed to attract consumers to the Dick Smith stores which Gerry Harvey had described as “crap stock”. 


Click to enlarge

Aldi Set To Expand Appliance And CE Sales As Revenues Hit $6 Billion

by

German supermarket chain Aldi who is set to expand their house brand appliance and consumer electronics business turned over $6 Billion in Australia in 2014.

 

The Company whose performance and open reporting of profits

has left egg on the face of Wesfarmers chief executive Richard Goyder who recently

said Aldi’s tax affairs required a “good look” has recently submitted

documents to the Senate inquiry into tax avoidance.

 

What the documents have revealed is that Aldi unlike

Woolworths is delivering surging profits in its Australian business who are

working closely with several International and Australian based distributors to

expand their range of house branded appliances which according to Aldi

management “sell out” within hours of being ranged.

 

Last year the Company sold 10,000 55″ TV’s in 90

minutes, also popular are their food mixers and combination Sterling oven, range

hood and hotplate sets.

 

In a submission to the Senate inquiry into tax avoidance,

the notoriously publicity shy discount supermarket chain both defends its

behaviour on tax and reveals its profitability.

 

The company’s submission to the Senate charts its sales

growth from $3.14 billion in the 2010 calendar year through to fractionally

under $5 billion in the 2013 calendar year.

 

It reveals the company’s pre-tax profit more than doubled

over the same period from $121 million in 2010 to $261 million four years

later.

 

The figures show Aldi’s revenue and profit climbing strongly

each year. That has come as Aldi has expanded rapidly to establish a network of

373 stores in Queensland, NSW, ACT and Victoria now employing 9000 people.

 

The company uses the profit figures to justify its tax

position. It declares both its income tax expense, which is an accounting

assessment, as well as its actual income tax paid average more than 30 per cent

over the period. In one year, 2011, the company claims to have paid 34 per cent

income tax well above the 30 per cent corporate tax rate.

 

The figures are not produced as audited accounts so the

underlying assumptions are not entirely transparent but the submission is

signed by the company’s Australasian chief executive Tom Daunt.

 

Aldi Senate Submission Fairfax Media said that one of the

key focuses of the Senate inquiry is transfer pricing. Aldi informs the

committee that it does not hold any related party loans and does not pay

royalties or licence fees to international related parties.

About 1 per cent of its merchandise and services expenditure

is made to international related parties, it says.

 

“In summation, as evidenced above Aldi wishes to make

it explicitly clear that it does not engage in the inappropriate pricing of

international related party transactions for the purposes of artificially

reducing taxable profits in Australia,” it says.

 

The company also claims to have a “very open and

positive working relationship” with the Australian Taxation Office (ATO).

 

Microsoft Flogged For Trying To Gouge Consumers With New Platform

by

Microsoft who are tipped to launch a “Gaming” TV in partnership with Hitachi, in an effort to flog more Microsoft content, is copping a flogging for their Universal Windows Platform (UWP) initiative which is behind their TV move.

Recently we revealed that Microsoft has built a closed platform-within-a-platform into Windows 10 in an effort to lock down the consumer PC ecosystem and monopolising app distribution and commerce.

While Microsoft are giving Windows away for free they are desperately trying to build revenue streams prior to introducing a subscription model for Windows next year say insiders. 

Gears of War Developer Tim Sweeney has told the UK Guardian that the move is the most aggressive move Microsoft has ever made. 

While the company has been convicted of violating antitrust law in the past, its wrongful actions were limited to fights with specific competitors and contracts with certain PC manufacturers.

This isn’t like that. Here, Microsoft is moving against the entire PC industry – including consumers (and gamers in particular), software developers such as Epic Games, publishers like EA and Activision, and distributors like Valve and Good Old Games.

Both ChannelNews and SmartHouse have been a lone voice in pointing that there is nothing free about Windows 10 and that Microsoft are out to strip share from PC vendor’s retailers who sell their products while stripping revenue from consumers.

A one stage the CEO of Ogilvy PR Kieran Moore, the PR Agency for Microsoft threatened to get her lawyers “onto us”. After we wrote a story that Microsoft did not like. No letter was ever received. 

This is a Company that is sent into bat on behalf of Microsoft executives who hide behind the skirt of people like Moore as it appears they are unable to handle constructive criticism.  

Microsoft’s strategy is simple, they offer Windows 10 for free, then strip information from tens of millions of consumers who have loaded the software. This then allows Microsoft to use their monopoly to sell consumer products. 

They will then move to charging to a monthly Windows 10 subscription in the same way that they sell an Office 365 subscription.

Currently most TV manufacturers with the exception of Hitachi, who have their own OS have rejected Microsoft’s advances to build a TV with a Microsoft OS.     

Recently Microsoft launched new PC Windows features exclusively in UWP, and is effectively telling developers you can use these Windows features only if you submit to the control of our locked-down UWP ecosystem. 

Sweeney writing in the Guardian said ‘They’re curtailing users’ freedom to install full-featured PC software, and subverting the rights of developers and publishers to maintain a direct relationship with their customers.

Windows Store and UWP

I’m not questioning the idea of a Windows Store. I believe Microsoft has every right to operate a PC app store, and to curate it how they choose. This contrasts with the position the government took in its anti-trust prosecution, that Microsoft’s free bundling of Internet Explorer with Windows was anti-competitive.

My view is that bundling is a valuable practice that benefits users, and my criticism is limited to Microsoft structuring its operating system to advantage its own store while unfairly disadvantaging competing app stores, as well as developers and publishers who distribute games directly to their customers.

The specific problem here is that Microsoft’s shiny new “Universal Windows Platform” is locked down, and by default it’s impossible to download UWP apps from the websites of publishers and developers, to install them, update them, and conduct commerce in them outside of the Windows Store.

It’s true that if you dig far enough into Microsoft’s settings-burying UI, you can find a way to install these apps by enabling “side-loading”. But in turning this off by default, Microsoft is unfairly disadvantaging the competition. Bigger-picture, this is a feature Microsoft can revoke at any time using Windows 10’s forced-update process.

Does Microsoft think independent PC developers and publishers, who cherish their freedom, are going to sign up for this?

Microsoft has certainly followed this lead in technically exposing, but practically burying, options that let users escape from its force-bundled services. If you’ve tried to change your Windows 10 search engine, web browser, or movie player, or to turn off their invasive new lock-screen ads, Windows search bar Bing spam, and invasive “analytics”, you know what I’m talking about. It’s a deliberately anti-customer experience: the options are there, but good luck finding them.

The ultimate danger here is that Microsoft continually improves UWP while neglecting and even degrading win32, over time making it harder for developers and publishers to escape from Microsoft’s new UWP commerce monopoly. Ultimately, the open win32 Windows experience could be relegated to Enterprise and Developer editions of Windows.

An Open PC Ecosystem is a Vibrant One
Valve’s Steam distribution service is booming with over 100m users, and publishers like Adobe, Autodesk, Blizzard, Riot Games and EA are operating highly successful businesses selling their games and content directly to consumers.

Microsoft’s situation, however, is an embarrassment. Seven months after the launch of Windows Store alongside Windows 10, the place remains devoid of the top third-party games and signature applications that define the PC experience. Where’s Photoshop? Grand Theft Auto V? Fifa 2016? There are some PC ports of what were great mobile games, and some weirder things, such as the Windows 10 port of the Android port of the PC version of Grand Theft Auto from 2004.

But the good PC stuff isn’t there, with the exception of Microsoft’s own software products. Does Microsoft really think that independent PC developers and publishers, who cherish their freedom and their direct customer relationships, are going to sign up for this current UWP fiasco?

Sweeney concluded that Microsoft’s intentions must be judged by Microsoft’s actions, not Microsoft’s words. Their actions speak plainly enough: they are working to turn today’s open PC ecosystem into a closed, Microsoft-controlled distribution and commerce monopoly, over time, in a series of steps of which we’re seeing the very first. Unless Microsoft changes course, all of the independent companies comprising the PC ecosystem have a decision to make: to oppose this, or cede control of their existing customer relationships and commerce to Microsoft’s exclusive control.

WA Has The Grumpiest Consumers And Panasonic Plasma Is King

by

Panasonic Hisence and Virgin Mobile are among the most trusted brands in Australia whilst the “grumpiest” CE consumers live in WA according to a new consumer survey.

The first national study by Canstar Blue, a division of Canstar Cannex, showed Australian consumers are generally more satisfied with the less established brands than some of the big brands like Sony, Telstra and LG. Women were also seen as being more satisfied than men with their consumer electronics purchases.
Despite this, Panasonic was able to push through with their plasma TV offering says Canstar Blue.
Head of Research, Steven Mickenbecker, said the detailed study of Australian consumer satisfaction showed some interesting results.
“It turns out Australian consumers are more satisfied with brands that are challenging the traditional leaders in these categories. In the battle for the consumer, it seems that bigger is not necessarily better,” said Mr Mickenbecker.
“Our study shows that Hyundai has successfully taken on industry stalwarts such as Ford and Holden; Virgin Blue and Virgin Mobile have triumphed over Qantas and Telstra; and Hisense LCD TVs have come out ahead of brands such as Sony.
The first Canstar Blue study surveyed more than 2,500 Australian consumers across key demographics to measure and track customer satisfaction. The highest ranking brand in each category today received the Most Satisfied Customers Award.
The Canstar Blue study asked consumers to vote for their currently used brand in each category, covering aspects such as price, service, range of products, accessibility and clear bills. The survey was undertaken in conjunction with professional market researchers, Colmar Brunton.
Australia’s most popular brands were: (See Over).

 
Major Bank ANZ
Challenger Bank ING Direct
Domestic Airline Virgin Blue
Mobile Phone Carrier Virgin Mobile
Car Hyundai
Electronics Retailer Retravision
LCD TV Hisense
Plasma TV Panasonic
Other key survey findings
· Australian women were more satisfied with their chosen brand in every category tested, including choice of airline, car, mobile phone provider, television and electronic retailer.
The results also showed men are fussier when it comes to spending money, proving far less happy with the value provided by their airline, car and phone.
Practicality rules for Australian men, who were happiest with functional aspects of their brands such as service and product performance.
Baby boomers lived up to their optimistic reputation, reporting greater satisfaction with their favourite brands than both Gen X and Y. They are also the happiest generation when it comes to the service and value they receive.
South Australia turned out to be the happy state, with residents reporting greater satisfaction with key brands, the value they receive, service, airline punctuality and clear mobile phone bills.
West Australians emerged as the grumpiest Aussies, proving the least satisfied with key brands, service and airline availability.”

Microsoft seeks partners to build $300 PDA phones

by

BenQ or Acer are in the box seat to snare a global contract to produce a sub $300 PDA phone for Microsoft.

The move is part of a plan by Microsoft to expand its share of the global OS (operating system) market for mobile devices, according to sources at Taiwan makers and vendors. Microsoft has already exchanged ideas about the potential project with its major partners in Taiwan, including High Tech Computer (HTC), Quanta Computer, Asustek Computer, Acer, Mitac International, and BenQ, with both BenQ and Acer being the prefered two suppliers. Most Taiwan makers generally support Microsoft’s plan to optimise its mobile operating system, but they said there still is a long way to go before the software vendor and local handset makers can jointly bring down overall production costs for PDA phones.

Jack Tong, president of own-brand handset vendor Dopod International, said that it is difficult for makers to drastically cut down their costs as the production of PDAs and smartphones can hardly reach a suitable economy of scale.

With consumers demanding more functions from PDA phones, it would probably take two years for makers to be able to roll out sub $300 PDA phones, contended Hwang Shan-rong, chairman of Taiwan-based PDA phone maker E-Ten Information Systems.

Apple Pulls The Plug On Samsung

by

Samsung’s guilty plea to a felony price-fixing charge is believed to be the reason why Apple has pulled out of a deal with the Korean company.Samsung Electronics Co.’s talks with Apple Computer Inc. on a possible joint investment to produce NAND flash memory chips — a key component of Apple’s newest portable music players — have broken down.

Samsung spokeswoman Sungin Cho said the negotiations “didn’t proceed beyond the preliminary stages,” but she would not say why.

The Korea Times newspaper, however, reported Monday that the potential $3.8 billion joint investment deal collapsed because Apple pulled out after hearing that South Korea’s Fair Trade Commission could investigate Samsung over its supply of flash memory to Apple.

Samsung is supplying the chips, used in MP3 players and digital cameras, to Apple for use in its new, pencil-thin iPod Nano music player.

Earlier this month, local media quoted Fair Trade Commission Chairman Kang Chul-kyu as saying on a radio program that the antitrust regulator could investigate Samsung if necessary on whether the company sold chips to Apple at below-market prices.

South Korean media have reported that Samsung is supplying the chips to Apple at half their market value, a claim Samsung executives deny. The Korea Times reported that South Korean MP3 manufacturers claim their sales are being hurt by the low price of the iPod Nano.

Last week, U.S. officials said Samsung will pay a $300 million fine to settle accusations it secretly conspired with industry rivals to fix prices of dynamic random access (DRAM) chips and force consumers them to pay higher prices. DRAM chips are most widely used in personal computers.

Samsung is the world’s biggest producer of DRAM and NAND chips. It is the second-largest semiconductor maker after Intel Corp. and is also one of the largest makers of liquid crystal displays, or LCDs, along with domestic rival LG Philips LCD Co.

Samsung’s guilty plea to a felony price-fixing charge capped a three-year investigation by the U.S. Justice Department into makers of the chips. The penalty is the second-largest criminal antitrust fine in the United States.

While Samsung officials have openly talked about supplying flash memory chips to Apple, they have declined to provide details.

Last week, I.J. Kim, vice president of memory sales and marketing at Hynix Semiconductor, the world’s second-largest memory-chip maker after Samsung, said that Hynix is in talks with Apple to supply NAND flash memory chips. He gave no specifics.

Benq Buys Siemens Mobile Business

by

The CEO of BenQ is confident of success following the aquisition of the Siemens mobile phone brand. He blames poor management decisions for past failures.

 buy Siemens loss making Mobile Phone division which is #2 in Europe.

Asia. BenQ is a relative newcomer to the handset market, Siemens are number two in Europe and number three Latin America and we can build on this. Siemens is also doing very well in Asia, and this is one area where BenQ can add value”.Germany are relatively high, but we have no plans to shut down Siemens’ handset plant at Kamp-Lintfort, Germany. We have talked to the German workers, but not negotiated with their union as some reports have claimed. We are not yet their boss. We have gained their understanding that we will continue to run the plant according to the terms of the acquisition contract” he addedSaid Lee Some handset vendors have come knocking our door offering us all of their OEM orders if we agreed to give up our branded business”. Contract manufacturing does not have a future. Any normal enterprise should hit the road to a branded business”.Russia and Germany, and their share in the China market is edging close to that of Samsung Electronics. BenQ’s 32-inch LCD TV is the segment leader in Taiwan, while its DVD-RWs are number one in both Taiwan and China.

Online Not As Profitable As Stores Claims Officeworks CEO

by

The CEO of Officeworks claims that selling online is not as profitable as selling goods in a store.Ward, who was speaking at the Retail World conference in

Melbourne, blamed “small” purchases for a fall in online profitability.

He said that while

online sales accounted for 13 percent of Officeworks’ sales, they generated

less than 10 percent online despite less staff and lower lease costs.

“We are selling more online than we ever were before…we are selling more units; we have more transactions going through our

entire business,” he said. “But we are selling them for less, as

basket sizes have come down because we have made life so convenient for the

customer.

“That’s not a bad thing, but it does have implications

for your profitability because your supply chain is under more pressure than

ever from selling more baskets, more often.”

Big W managing director Julie Coates said retailers needed

“resilience, patience and courage” to stick it out through the early

years of online selling, the Australian reported. 

“You’re setting yourself up for the future, not for

today, and you need to be in it now if you’re going to build and learn to

create the multi-option future for the customer,” she said.

Ms Coates said it was vital that any move into online be

integrated into the rest of the business, rather than run as a separate

division, so that both sides could benefit from the capabilities and resources

of the other.

EXCLUSIVE: Breville Axes Senior Management

by

Breville who are witnessing major growth in the US market, have started to axe staff in their domestic operations.

Richard Babekuhl pictured right, the former marketing manager at Breville and of late business manager at the Breville owned Kambrook along with Sonya Fetherston the sales and marketing operations manager have been given a pink slip.


Babekuhl said “I never saw this coming”. 
 
The move comes as Breville looks to expand their brand in the US where sales for Breville branded products grew overall by 19% last year Vs 8% overall growth for the 12 months in Australia and New Zealand. 

Babekuhl former marketing role at Breville has only just been filled with the appointment of Cliff Toring who has rebranded the position as Global Go-To-Market Officer.
 
Previously Toring has worked for Grey Advertising in New York, Saatchi & Saatchi Advertising in Hong Kong as well as like Polo Ralph Lauren and Nike. His most recent role was VP Global Brands director consumer for Nike.

Babekuhl, at this stage is not saying where he is going however ChannelNews understands that he is considering several offers. 

His exit comes as Breville is witnessing a rise in sales with both their Kambrook and Breville businesses. 

In his role running the Kambrook business Babekuhl was responsible for a portfolio, across over 200 product lines, It’s not known whether Breville which is currently undergoing a management shakeup will continue to invest in the Kambrook brand.  

Babekuhl led a team of 16 including Category Managers, Test Kitchen, Engineers and Sales to manage the New Product Development pipeline from concept to commercialisation.

Prior to taking on the internal Business Manager role at Kambrook he was responsible for the role out of several new Breville products. He joined the Company in 2011.

Last week Breville announced that they had lifted half year profit 4% but warns its future financial performance will be ‘unpredictable’.

The company made a net profit of $30.8 million for the six months to December 31, up from $29.7 million a year ago.

Breville, which sells Nespresso, Philips, Kambrook and Ronson branded products, said that sales for the six months grew 12.7 per cent to $331 million.

It expects mid-single digit earnings growth for the full year, but has flagged patchy international economic conditions as a major challenge going forward.

‘Given the continued sporadic business conditions across the globe, the group believes future financial performance will be relatively more unpredictable,’ the company said.

In the USA Breville is seen as an aspirational brand with the Company now looking to expand their brand offering in the US. 

In Australia Chief executive Jim Clayton is flagging a slowdown due to stiff competition and rising costs. Revenue in ANZ slipped 2.8 per cent.

Clayton said Breville was working on new ways to improve the future profitability of the Australian operation. 

‘The benefits of these initiatives will commence in the second half of the 2016 financial year,’ he said.

EXCLUSIVE: JB Hi Fi Cut Major Tax Free Airport Deal

by

Days after Harvey Norman walked away from buying the Dick Smith Move stores at Australian airports, JB Hi Fi has cut a 6.5 years deal to become the exclusive technology partner with Heinemann Tax and Duty free at Sydney airport.

Richard Murray the CEO of JB Hi Fi has described the deal as “brilliant”. 

He said “Consumers today are getting to airports early they are in holiday mood and don’t mind spending. The vendors that we have spoken to about this deal are stoked as they recognise the value that airports deliver and are keen to work with us as part of this deal”.

According to Apple sources the Dick Smith Move stores were shifting large volumes of Apple products at airports and in some months the Move stores at airports sold more Apple product than Dick Smith stores.

Murray said “Sydney airport is world class and we in partnership with Heinemann will deliver leading brands across several categories”. 

He added “Heinemann and Sydney Airport have been working together to create a world class Duty Free precinct and JB Hi-Fi is looking forward to being part of this exciting development.” 

Heinemann is the leading Tax & Duty Free operator at Sydney International Airport and its MD Constantin Wiesmann said “we have been most impressed with the professionalism exhibited by JB HI-FI to date and we are confident the partnership will prove mutually beneficial.”

Both Parties acknowledge the support Sydney Airport Corporation Limited has provided to enable a fast transition to JB Hi-Fi as exclusive Technology partner commencing 1 April 2016.

This follows the collapse of the Move stores.

By partnering with an established operator at Sydney JB Hi Fi have reduced their exposure to what Jerry Harvey described as “horrendous” rents when he decided to not take on the Move stores.