EightBlack.

I always thought that this was strange - the fact that Vodafone and Optus got the jump on Telstra for the rights to re-sell the much anticipated 3G iPhone.

News yesterday that Telstra had finally agreed to the commercial model between Apple and Telstra’s bean counters.

Now that it’s a 3 horse race in Australia, it will be interesting to see just which carrier gets the jump on the market. My bet is that Vodafone will struggle - their regional and outer city coverage just isnt up to scratch. Optus may surprise due to its dominance in the youth market.

But Telstra has the clear advantage of strength on its side - with the largest customer base, largest business penetration, and best regional coverage.

Apparently, 4th carrier 3 (Three), has spat the dummy and all it can come up with as a strategy is to have all its customers sign a petition demanding that Apple let it sell the iPhone as well.

Yeah. Right. As if Steve Jobs has ever taken notice of a petition. Especially from a carrier with the smallest share in a market of 21 million people.

If Telstra don’t screw up the execution, their iPhone deal might just be the shot in the arm the ailing carrier needs. Lets see how long it takes them to get their marketing department to set up an adwords account and compete head to head with with Vodafone and Optus.

All I know is that its going to be mighty hard to shift all the enterprise customers from their RIM devices to a trussed up iPod.

Time will tell.

I’ve been a client of these folks for 8 years. Have a read. Particularly the last line of the email.

Good Morning Simon,

Just advising you of an overpayment that we have received for TaguchiMail for Invoice 280/10213. There was already a payment of $289.00 with an outstanding amount of $31.64 made on 6th May 2008.

You have now paid for that $31.64 from the payment made on 23rd June 2008. The Credit of $289.00 has now been put towards the invoice was is due tomorrow Invoice 280/10339.

The only amount outstanding for invoice 280/10339 is $0.41 which is due by tomorrow.

Kind regards,

Candace Shepherd
Operations Manager

All I can say is this. Idiots.

Well, sort of.

I was in Sydney yesterday and caught up with Rick Webb, one of the original founders of BlueFreeway. He’s clearly a very intelligent guy and we had a decent chat - all of which was off the record.

Which is a pity.

The BlueFreeway story needs to be told from both sides.

My feeling is that we haven’t heard the last of Rick.

Nor is the saga at the digital camp by any means over.

The good news is that the stock price recovered somewhat yesterday (if you could call it that) and is now trading just above the 7 cent mark. Macquarie bailed on all its holdings last Friday - hence the 6 million or so shares that hit the trading floor.

I had a client call me the other day and asked if I had shares in BlueFreeway. After reading one of the recent posts about the carnage over at BlueFreeway, he was concerned that I was some sort of disgruntled investor. Which I’m not. And I really don’t have it in for them.

But this whole saga simply perplexes me.

To put this into some sort of basic perspective, if you had purchased $1000 worth of BlueFreeway stock exactly 1 year ago, that would be worth the princely sum of $42 as of close of play today.

Now I didn’t do that well at economics at school, but even I know that’s bad.

Last Friday, the stock resumed trading after a months hiatus. When it had stopped trading 4 weeks ago, the share price was at 24 cents. Finished close of business on Friday the 13th at 9.3 cents. Natalie broke the story here.

On Monday the 16th June, over 16 million shares traded hands. Finshed the day at 5 cents. The market cap of the entire company is worth no more than $7 million dollars.

The guys over at BlueFreeway must be chewing their fingernails to the quick. Or maybe their bankers are, given that the facility that they have with the NAB has hit its limit of $34.6 million.

What I don’t get is the motive behind the IPMG Group’s decision to effectively bail the company out. First they rode in on their white horse and scooped up 19.9% of the company. I dare say they paid more than 5 cents a share.

They then agree to inject an immediate $6.5 million cash injection by way of a convertible note. According to the press release last Friday, the note will be convertible into BLU shares at 12 cents a share and will attract an interest rate of 400 bps (basis points) above the BBSY whilst being serviced otherwise 600 basis points while being capitalised.

In plain english, the BBSY refers to the Bank Bill Swap Bid Rate and 400 basis points refers to 4% above that (or 6%  when it refers to 600 basis points).

Obviously the IPMG guys are no fools. They would have poured over their numbers. And they can well afford to bail the entire thing out, pay out all the bank debt and appease unhappy creditors if the thing goes completely pear shaped.

Michael Hannan and the rest of the Hannan Clan benefited a couple of years back when their entire magazine and newspaper portfolio was sold to in 2 separate deals for the $350 million mark. Assuming he still has some of it left after his divorce around the same time, he still should be fine with whatever he chooses to do with BlueFreeways bankers and finance folks.

Why IPMG has such a hard on for BlueFreeway I’m not sure. I’d sure love to ask them.

When you crawl all over Google in search of information around IPMG, you are quickly impressed with the rich history of the company, the domination of one industry vertical (ie printing), the continued investment into the latest technology and equipment and the sheer focus in sticking to what it knows best. Printing.

Not the web. Not as a corporate rescue merchant. And not as a company who has a reputation for taking on projects that need a very strong stomach and a boatload of cash to revive.

By his own admission, his foray into publishing and the magazine business ended up with the family company selling all those assets. For a tidy sum as stated above. Hannan cited “a lack of growth opportunities and none on the horizon” as the key drivers behind the sale.

If IPMG are about making money and about passing the torch from one generation to the next, then I fail to see what sort of inheritance the major stakeholding in BLU will yield. It could take years for this thing to recover - if it ever does.

And what sort of growth opportunities can the group exploit if they are have a boat anchor around their necks?

My humble knowledge of the digital landscape is that morale is key, the right environment, cool projects, plenty of smart bastards in the same office and hopefully, light at the end of the tunnel. And great clients.

Hard to attract if you’ve been lumbered with something akin to a STD. The stigma of BlueFreeway will tarnish each and every member company and their staff. Not their fault. But a fact they have to live with.

IPMG are in for a lot more than the $6.5 million they have initially promised. Their findings, during the trading suspension, revealed that the company needs around $9 million immediately, will post a $6.8 million dollar loss (lets call it $7M) this financial year (instead of $200K), and Hannan has personally guaranteed to underwrite the 3 for 2 rights issue (to raise another $12M), if the market doesn’t come through with the money.

He’ll be reaching for his cheque-book sooner rather than later.

Now which existing investor in BLU, who has all their faculties together, would agree to a 3 for 2 rights issue at 10 cents, when yesterdays stock price ended up at 5 cents.

They also have this small detail of the $35 million they owe the NAB. At present, most senior Aussie bank executives have no sense of humour and because of the train wrecks with Opes Prime, the nervousness around the viability of even industry titans such as Babcock & Brown, plus a litany of others, the banks credit departments are calling the shots.

Apparently, you now meet with the banks and they come armed with a toilet brush and 3 people (who look like they just killed their parents). Its not pleasant.

Or something like that.

I had a meeting with Stuart Mitchell a little while back. While he didn’t give much away about their perspective on whatever deal they had in mind (probably because his old man wasn’t in the room), it’s public knowledge that Mitchells were sniffing around BLU.

But even Harolds appetite for large meals wasn’t enough. Mitchells probably bailed as soon as they lifted the hood on what was promised to be a Ferrari and soon discovered a Kia Picanto (or Salsa, or Avocado) or whatever the hell they call those silly little Korean cars.

Last week I was supposed to have lunch with Lori Silver from Clear Light Digital. She never showed. And I never heard from her - despite my emails and voicemail. Odd I thought, given that she called me in the first place. Now, being stood up by women is not a new thing for me. But I thought this was weird.

All I know is that if I had sold 27% of my company (which Lori et al did) for $924,000, it would piss me off no end to keep remitting one third of my earnings back to a mother ship which was about as sea worthy as the Titanic.

If the original sales pitch to all these independents which BLU went and acquired, was that the corporate entity (ie Head Office) would be there to provide leverage, capital and expertise, then it’s clearly failed. Many of the individual companies now within the portfolio would (or could) be worth more than the market cap of the whole shooting match.

Time will tell whether or not Hannan and his team can ressurrect the ailing digital group. And his absolute passion for remaining well out of the public eye and his notion that you can employ people to keep you out of the media is about to be blown to smithereens.

Because he’s taken the reigns, he’s also taken onboard the very public role of company punching bag. Shareholders, bankers, clients, staff and the media all want a piece of him.

And no matter who he employs to control the environment, the web has already proven that no matter what length you go to, the conversation exists. With you. Or without. It doesn’t care.

Tomorrow I’m in Sydney. And I’m having an off the record chat with someone who knows the other side of the story to BlueFreeway. It’s a pity the person won’t go on the record. The story deserves to be told.

Interesting times ahead.

*Stock Quote courtesy Business Spectator, Image Stuart Mitchell courtesy Mitchell website

It’s time for the management at the embattled digital group to come clean.

Just 2 days ago, after just 3 months, Danny Herceg - the man who was recruited to primarily re-build the company’s finances due to his high profile legal and banking network, quit.

Along with him went co-founder, Tony Charara. Although Charara is apparently still heavily involved with the finances of the group (more later).

According to the March 12, 2008 press release by BlueFreeway,

“Danny is a senior corporate and commercial lawyer with particular specialisation in capital raisings, mergers and acquisitions, privatisations, restructurings and venture capital. In addition to Danny’s capital raising experience, he also advises on various corporate law issues including prospectus issues, corporate governance, and employee share and option plans, as well as joint ventures and non-equity funding”.

The BlueFreeway shares are still in a protracted trading halt. It’s been a month now. This is not really their fault. If their taking advantage of a legal loophole within the charter of the ASX, then so be it.

But its clearly a fault that rests with the ASX. I just dont think its appropriate corporate regulation by the ASX to allow a company an unreasonable time frame (like a month in this case) to ascertain their financial viability. How hard can it be?

I’d be keen to interview both guys - but clearly they may have better things to do nor will they probably be allowed to talk to anyone. Or want to.

Interestingly, Tony Charara cites his time at BlueFreeway as something of an achievement with his new venture here. Not sure if I agree with the logic.

The problem with not communicating to the shareholder base is that in the absence of any concrete direction and advice, people will make and form their own opinions. And because there is a lot of pissed off investors and staff, people want to vent their anger. And rightly so.

I’m noticing this anger within the comments I’ve received over the past few weeks. And by the slew of email that has hit my gmail account.

Consider this “re-counting” of events that were relayed to me.

BlueFreeway, in its quest for world domination, went out and acquired 3 separate companies in Thailand. This was late last year, October, to be exact. Quite what for, I’m not totally sure. The companies were Media Synergies, Planetutech and Reflexible. The press release is here. The 3 acquisitions, according to the BlueFreeway announcement, cost the company A$1.5million (for all 3) and would add $1 million in revenue to the group.

Bill Emden, the Group Managing Director for BlueFreeway Asia stated that the acquisitions would allow BlueFreeway to service the rapidly growing Thailand digital media industry with world class talent.

However, if you are to believe the comments by numerous staff in Thailand, nothing could be further from the truth. For one, according to insiders, the much hyped “Blu” portal was nothing but smoke and mirrors.

Second, the access to technology and financial resources to grow and expand the “rapidly growing Thailand digital market” never eventuated.

When I tried to find out more about senior execs like Bill Emden, Google came back with this. I decided to look no further. Apparently, Emden is no longer with BlueFreeway, and nor are any of the other “head office” staff in Asia. I am told that the number one listing under Google for Bill Emden and the Bill Emden who ran BlueFreeway in Asia are one and the same person. See here for proof.

Whenever businesses are put under extreme pressure, like BlueFreeway is now, rash decisions are made.

Take for example, the alleged recent requests by head office to owners of several BlueFreeway companies to buy back their businesses. The only trouble is though is that many of the businesses that BF acquired, they acquired 100%, lock, stock and barrel. If you take the 3 entities in Bangkok for example, as stated above, they paid $1.5 million for all 3. This amount wouldn’t have made life changing differences to anyone.

All it did most probably was shore up some debt and return some “sweat” capital back to the respective owners.

According to some, Sydney is now pressuring these offshore entities to buy back their companies for the original amount paid. All I can ask is “why”. And what makes the head office at BlueFreeway think that they can do this? It gets even worse. Apparently threats and intimidation are occuring, resulting in even more bad blood between employees, shareholders and owners.

I actually feel sorry for those people who only sold a percentage of their company to the fast talking sales guys who pedalled the original BlueFreeway dream.

At least the people who sold 100% made the call at the time they did their deal. They made their bed. Now they’re lying in it. They can either quit and start again - or ride the storm out and wait for events to unfold. Either way, they’ll be better from the experience. They might not think that now, but they will be.

But the people who agreed to sell 51% or 27% or whatever the number, are stuck with this noose around their neck. More like a boat anchor.

Whatever happens, BlueFreeway need to make the call. And that call should be to quit now. Let the respective businesses (which have some world class talent within them) get on with their lives.

I think their stock will survive all of 5 minutes on the ASX, should they resume trading. There’s probably an unlimited number of “sell” orders queued and waiting to go, no matter what the price.

I do not for one minute, believe this is a salvageable ship. The damage has been done.

Too many people have left, including the majority of the founders, staff morale is in the toilet, the stock is suspended, past owners who are now employees are disgruntled and distracted and the vapourware behind their original proposition is now exposed.

The conclusion I have (and its obviously a personal one) is this. People get appointed to the board - and the smart ones promptly quit (after they see what’s really there). There appears to be no one in charge. Demanding that the 100% owned companies buy back their businesses is sheer desparation and the deafening silence to the market (which is now in its 4th week) can’t be good.

And I have no idea what Michael Hannan and his company, IPMG intend to salvage from all of this - but it can’t be much.

The saga will no doubt continue. Which is a shame. It needs to end. And quickly.

I know this is an over used saying - but if there’s one event you attend this year, this should be it. If you have anything to do with the web, if you want to try and put your finger on “the pulse”, if you want the chance to interract with some of the brightest people driving the web, then there is no better event.

I attended this last year. Coverage was picked up by John Battelle and The Times Online. That’s irrelevant. What is though is that I was the only Aussie there. I think there was a Kiwi - but they don’t count.

I know it’s a tough gig to get into. Last year (and according to the event organisers) - anywhere between 7,000 to 10,000 applied for a ticket to attend. Less than 1,000 actually were granted access. And the entry fee isn’t cheap.

But these aren’t barriers that any online agency, or company making its living online can’t jump over.

Now I know that there is plenty of digital talent in Australia, that we can mix it with the best but the last time I looked, guys like Steve Ballmer, Bill Gates, Jerry, Larry, Sergey, Eric, and Mark Zuckerberg all lived on the West Coast of the USA.

And after having spent the last 12-months trekking back and forth to the states, I will tell you that this is where the the web is being driven from. While the event organisers would no doubt love to come down under and run an event, it’s not going to happen anytime soon.

Do yourself a favour. Seriously consider going. You won’t regret it.

Don’t let me be the only one standing there marvelling at how the world’s biggest economy can seriously think that Budweiser is a beer. I beg you.

I know that Bill Gates reckons he’s going to give away 90% plus of his wealth before he dies, but he may end up running out of moolah sooner rather than later if this takes off.

My initial gut response to this is that I just don’t get it. I don’t think that the relatively small “cash back rewards” will make the difference.

John Battelle is going to provide a lot more detail this weekend - given that he’s just visited with the MicroHoo folks.

Lets wait and see what he reckons. Good coverage of the proposal here. And a different opinion here.

Just as a side note, I saw Fake Steve at Web 2.0 recently. He’s mad. But funny as all shit.

Something really smells now.

News today via the ASX website is that the beleagured digital conglomerate has sought additional time (on top of the original extension) to try and work out just what is under the hood, so to speak.

You can bet your bottom dollar that there’s consultants in there from one of the accounting firms, who specialise in insolvency.

Via their ASX statement:

“Further to Bluefreeways request for voluntary suspension on May 7th, the company is seeking an extension to the voluntary suspension of its securities”

(Translation - the insolvency experts and forensic accountants are only halfway through their audit and all is not looking well. The words “trainwreck” and “carnage” have often been used these past 2 weeks and the remaining finance team are swearing louder than Gordon Ramsay)

Their ASX statement continues to mention how the current investigations are reviewing their accounts to June 30 as well as looking for further capitalisation options and that once all is said and done, we should be able to give you something definitive in the next 2-3 weeks.

Or something like that.

If you were a cynic (or a shareholder), you wouldn’t be impressed. In fact, each and every shareholder is completely hamstrung and unable to do anything until quite possibly its too late.

I really feel sorry for all those local companies who did a 50/50 deal for cash and stock when the fast talking Bluefreeway guys came along. There’s not one who wouldn’t be regretting their decision to sell.

Because if the core group goes pear shaped when they do finally make an announcement to the market, each and every company won’t be able to do anything. Potential buyers of the carcass (or carcasses) will be negotiating with someone from Ferrier Hodgson rather than the founders of the individual brands.

I’ve never heard of a company requesting an extension to a trading halt who then re-emerges completely unscathed.

Something is definitely up.

And I think the management of Bluefreeway owe it to their shareholders to be straight-up and tell them whats going on. In back and white. Not shades of Blu.

After all, you don’t need to be a rocket scientist to work it out. The audit and subsequent investigation can’t possibly take 3 full weeks to complete.

I hope I am wrong. I hope that whatever the announcement in yet another 2 weeks will be positive.

But I doubt it. I’m going to do some digging. I’ll keep you posted with what I find out (that’s if anyone is prepared to talk with me).

Let’s wait and see.

What on earth for?

Something is clearly up - and according to the official BlueFreeway Press Release, the management want up to 2 weeks because their initial investigation into the shambles is not yet complete.

So, on Monday this week, Blu asked for a trading halt. Then 24 hours later, they asked for an immediate suspension.

Whatever way you cut it, the future is not bright. More at the ASX site here.

Simple really. To put our finger on the pulse. One of the hardest things to do in this age of “the bigger web” is to actually keep up with it.

Sure, those of us who regard ourselves as being “tech savvy” will be able to talk with some degree of alacrity about the benefits of Twitter and blogging and the importance of being on sites such as LinkedIn and Facebook.

But secretly, many of us hope and prey that this fad will soon pass and our kids will assume control of the environment that we are battling to keep up with. Or at least I am.

I was lucky enough to attend the inaugural Web 2.0 event last year. This year promises to be bigger and better still.

Keynotes from industry titans such as Max Levchin (founder, Slide) - anyone with a Facebook account will know of Slides work, internet pioneer Marc Andreessen (founder of Ning, but better known for his wider contribution to the web with the creation of Netscape), Mitchell Baker (Chairman of the Mozilla Foundation, the real browser) -sorry to all you Mac Zealots, Jonathan Schwartz (CEO - Sun Microsystems and corporate blogger extraordinaire), Matt Cutts from Google, Ari Balogh (CTO of Yahoo!) and other industry heavyweights.

For those of you who have never been to Moscone West, the convention centre in San Francisco and the home of Web 2.0 for the rest of this week, here are some highlights.

1. The Moscone Centre (North, South and West) contains 2 million square feet of building area, with over 700,000 square feet of exhibit area. For those Aussies and in particular, folks from Melbourne, the Melbourne Entertainment Centre (Jeffs Shed) is less than half this size.

2. There are 106 meeting rooms

3. Over the course of the event, it is expected that twice the amount of media will attend this year as last and anyones guess of 10,000 plus people will pass through the event.

O’Reilly and TechWeb - the events co-producers have gone to great lengths to promote collaboration at the 2008 event. From The South Park Crawl, to the Booth Crawl at the actual Expo itself, to the Web2Open event (where anyone with a Web 2.0 Expo badge can share knowledge and join in open discussions etc), to the Birds Of A Feather Session (BoF) and the famed Launch Pad Sessions.

There’s no reason for any attendee to be shy - no matter how many un-resolved issues they have.

Web 2.0 provides the opportunity to plug-in to the Web. To gauge it’s pulse. And to connect with the very people who in the driving seat. Sure, 90% of the companies who are busily flogging their wares at the Expo itself and whose PR agencies are furiously pounding away at the media may not survive the next 12-months, the best thing is that there is still a level of belief and confidence in the web itself.

Google, Yahoo! and Microsoft are all watching in the wings. There’s news this week from both Jerry Yang’s crew (earnings announcement Tues US time) and something’s brewing with Microsoft.

I often wondered why Google doesn’t just take the event sponsorship outright. After all, with their recent earnings announcement, they could afford any fee. Instead, Microsoft, IBM and Etelos are the ones who take centre stage in this area.

It promises to be an action packed week. And to me, this event is the highlight of the year (apart from the Web 2.0 Summit).

Stay tuned. Video posts will commence tomorrow. We’ve got some interesting folks lined up who have graciously accepted the invite to talk on camera.

See you in 24 hours…