Internet provider iiNet saw it's stock value halved after slashing it's earnings forecasts due to the poorly executed takeover of Ozemail. Of course, making a conditional share placement at half the market price has a tendency to make existing shareholders nervous about the value of their shares..
iiNet's problems are a classic case study of how the IT industry gets it wrong so often. Ozemail was always going to be a problem child having been run down by it's previous owners. By buying a competitor bigger than itself, iiNet simply bit off more than it could chew.
The lesson is clear to IT businesses, big and small: Don't seek new customers if you are having trouble satisfying existing customers.
For customers, there's also a lesson. If there's an hour wait to get through to support, then that provider has a problem. Unless that provider is extremely cheap then you should be taking your business elsewhere.
Wednesday, May 31, 2006
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