EightBlack.

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…

For those who are interested, today is the last day of trading for Eight Black. Tomorrow we begin a new chapter as a part of a bigger, stronger entity.

Embarrassingly, the new websites are still being glued together - but we will get there.

The blog will be still be around for a little while - mainly because I have some commitments to the Web 2.0 folks in the US this April and then later in the year for the Web 2.0 Summit.

And besides, what other avenue lets me vent, swear and complain as much as I like.

I don’t know why but I was reading B&T today at work. Must have been bored.

Actually, it’s a good read and a quick way to see what their editors and journo’s think is important for us mere mortals to read.

Anyway, there was a small article about the recent resignation of yet another BlueFreeway Director - Warwick Smith. Apparently you’re supposed to address Mr. Smith as “Honorary” when writing his name and also use the initials “AM” as a way of recognising the fact that he is a “Member of the Order Of Australia”.

Apparently Gough Whitlam and the Queen are to blame for such nonsense. Bob Hawke thought he was abolishing the whole damn system when he was in charge - but instead he only eliminated the “knighthood and dame” fiasco, partly because he knew that no future PM would ever anoint the King Of Cactus Island (ie him) as a “knight” unless there was a gun held to their head.

Anyway.

So back to Malcolm Smith.

According to the BlueFreeway press release issued to the ASX at the end of Feb, the statement reads as follows:

“Unfortunately, according to professional and personal commitments, including the Federal Governments upcoming 2020 Summit, I am unable to maintain my seat on the board.

I am proud of my time at BlueFreeway and am confident that I am leaving the company in a stable position”.

Seriously.

Malcolm quit because he needs 12 years to prepare for a federal conference? Are you kidding?

That’s like me saying to my wife, “sorry honey, we can’t stay married and I have to leave now because in 12 years time Jessica Alba might change her mind and show up at the doorstep with nothing on and holding a large jar of honey”.

Or something like that.

The smart ones are jumping off the SS BlueFreeway like rats off the proverbial ship. First there was David Smithers, then Richard Webb and Ken McDonald and now poor old Malcolm Smith.

The first and last guys possibly have smart lawyers and PR folks - and wanted to put distance between themselves and a stock price that cant seem to pick itself up from the floor (currently at 29 cents). The 2 guys in the middle, Webb and McDonald, - we’ll there are always 2 sides to the story but it is obvious that they were pushed or had to go given was one the co-founder and the other the CFO.

The other thing I am curious about is why none of these press releases are on the actual BlueFreeway website. When you look for announcements under the “investors” tab, the most recent entry is October 07. And if you try and quiz the website by hitting the “analyst coverage” tab - all you get is a “page under construction” image.

Strange don’t you think?

I still think there will be a very large, uphill battle for BlueFreeway. The mistakes of the past may prove just too hard and just too fatal to shake off.

Last week, the Management of BlueFreeway requested that their shares be suspended from trading because they wanted another day to prepare their half-year financials. They’d already missed the Feb 20 deadline, and said that they would release the numbers on the 28th. Then they missed that date too and wanted another 24 hours.

Something was clearly bothering them. And naturally, the rumour mill was active.

When the results were posted, on the surface, they didn’t look all that bad. Revenues were $35 million but they had posted a loss of $4 million. Not as bad as some might have expected.
But when you drill into the detail towards the end of the report, this is what struck me as alarming.

“27% of Clear Light Digital was acquired for $924,000 in cash and just $10,000 in shares”.

Obviously the founders wanted the security and comfort of the folding stuff rather than scrip. Smart move.

Mark Kulic, the Partner at Deloitte who signed the Independent Auditors Declaration clearly has some doubt with his closing comments:

“Without qualifying our conclusion, we draw attention to Note 1, in the financial report which indicates that the disclosing entity incurred a net loss of $4,048,000 during the half year ending 31 December 2007, and as of that date, the disclosing entities current liabilities exceeded its total current assets by $42,347,000. These conditions, along with other matters set forth in Note 1, indicate the existence of a material uncertainty which may cast significant doubt about the disclosing entity’s ability to continue as a going concern…”

Why can’t the auditor just say “We’re worried like hell that the joints been run into the ground” or that “they’ve clearly screwed up the go to market strategy”. Or “bugger me, $42 million is a big number for anyone to jump over…”

Under the very last section “Subsequent Events” the report goes on to state:

“The company received commitments of $3 million by way of a private share placement” and “the company had received a non binding, indicative proposal for all of the shares of BlueFreeway Limited”.

Two things of importance - and perhaps not best left for the very last section of the report. One they desperately need the cash to survive. And 2, they probably find themselves in an unenviable position in having to deal with what might look like a fairly friendly offer to acquire the whole business but may turn out hostile in the end.

The other thing to note is that they breached their banking covenants. They’re not the only ones of late. But the NAB won’t have a sense of humour with this and while they may have extended the line of credit for the last time and given the BlueFreeway management another $3 million, they won’t want to kiss goodbye the $30 million or so in borrowings.

In accounting terms, they’ll have “the bank up their arse”. Or something like that.

When senior board members like David Smithers (ex PWC) and then the CFO jump ship, you’ve got to worry about what is really going on.

I really feel for the talented folks who sold some, part or all of their company’s to the BlueFreeway machine. Actually, the guys at Clear Light Digital are smart to take most of their payment in cash. As was anyone else who did the same. But the guys who took more like 50/50 in cash and shares and then who invested further in the company stock, must be regretting the day.

I don’t have it in for BlueFreeway. I really don’t, despite some of the negative comments my recent observations have sparked (by the way, if you remain anonymous, I won’t post your comment). Everything else is fair game.

I just think that the way in which they executed was remarkably flawed and if the ulterior motive was a stock market play, then the tactic has clearly misfired.

In the 6-months to December 2007, the group had acquired a controlling interest in a company in France, a company in the UK, one in Chile and 3 in Thailand. How on earth can they actually manage all those successfully and integrate efficiently without a shitload of money and resources?

It’s a very long road back from here. The stock, while recovering somewhat of late, has still a massive road ahead just to get back to its listing level. That’s if the market will allow it.

At the same time, BlueFreeway’s bean counters will be putting a lot of pressure on the entire stable of companies to remit the cash as quickly as they can. It’s such a short term focus when many of the founders will have been looking to the Group to provide stability, backing, funding and management expertise.

I’m afraid it’s all hands on deck and the ship is still taking on water.

My bet is that someone will come in and acquire the lot. For a song. And that is going to be shame.

*Image courtesy Hugh McLeod, Gaping Void. 

Tom Peters has this slide in one of his famous powerpoint “decks”.

It reads as follows:

“If you don’t like change, you’re going to like irrelevance even less!”

It sums up the fate of The Bulletin, Australia’s oldest magazine.

Apparently, it’s been around for 128 years. Which is a lot.

In an effort to shore up it’s dwindling circulation, the magazine went through an editorial shake-up and website re-vamp in 2006. Which is a bit like saying we’re going to make in transit repairs to the Titanic half way across the Atlantic ocean, after it hit the iceberg.

This has to be a wake up call to “traditional media”. That includes radio, (which the web blew past yonks ago in terms of revenues), press, and TV.

Let me ask you a question? When the news broke regarding the tragic death of Heath Ledger yesterday morning Australia time, where were you? And what medium did you turn to first? And second? And what about the stock market melt-down earlier this week - where did you go first for information?

Don’t buy into any of this nonsense that because something has managed to keep breathing for 128 years that it deserves eternal glory and the right to live. The audience and the way we consume media has changed. Forever.

You’re either going to watch what happened. Or you’re going to participate.

The article in The Age today went on…

“It’s not just a great magazine. It’s part of Australia’s history, so naturally I’m sad it’s not going to be there. It’s a terrible thing to kill off an institution like The Bulletin.”

ACP chief executive, Scott Lorson, blamed the closure on recent circulation figures of 57,039 - about half the sales from the mid-1990s - and “the impact of the internet” on the current affairs magazines.

“This is a sad day for all of us at ACP Magazines. The Bulletin has been an institution in Australian publishing and has provided its loyal readers with the best quality, in-depth news and current affairs analysis in the country,” Mr Lorson said in a statement.

“We have invested heavily in the title with top editorial, photographic and design staff who have been devoted to making The Bulletin the best of its genre. However, despite our best efforts, the magazine has simply not been commercially viable for some time.

Scott Lorson, the embattled editor blamed the recent poor circulation on the internet. What I perhaps think is more appropriate is that the blame lay on the management for not embracing the digital medium when it arrived. They should have dominated the RSS space, built the most content rich site in the country, built an email database that delivered the most relevant content weekly.

To say that the publication deserves to survive because its an institution is a croc. After all, the so called “loyal” readers voted with their mouse and their keyboards and ACP has no one else to blame but itself.

Is it a sad day? Perhaps. And I do feel sorry for the people whose jobs have been affected.

But ACP had plenty of warning. As did everyone else.

Hollywood is next on the web’s list of heavily entrenched, “that’s the way we’ve done it for years” type mentality. It won’t last. Just wait and see.

My final question is this. Do you think that The Bulletin deserved to live?

I for one, (and I know I sound like a heartless bastard), would have shut the thing down years ago if the editorial team refused to embrace the digital medium. Kerry Packer may be rolling in his grave, but I suspect more so out of anger with the incompetence of his senior team rather than the fact that the magazine won’t be published ever again.

*Image courtesy The Age 

I’m no stockbroker, but after the stock fell today to an all time low of 60 cents, I’d suggest there’d be some pounding of fists and clutching of hearts. At least, plenty of arm waving.

You probably can’t blame Bluefreeway too much on todays result. The market after all, did drop 408 points. Apparently that’s a lot.

Last week, 2 large tranches of approx 1.4 million shares traded hands for 73 cents. Man, whoever those guys were would be pissed. They’d be reaching for the portable defibrillator about now.

*Image courtesy ASX website

In the last week, the stock for the digital “allspark” has fallen from 99 cents to 76 cents. That’s close enough to 23%. In a week! Apparently, insiders were touting that if the share price fell below the psychological buck mark, there would be “blood on the streets”.

It must be flowing now.

The most recent article in the SMH just over 7 days ago said,

Bluefreeway hits the skids, now below $1

The news came after Julian Mulcahy, an analyst at Citigroup, slashed his target price for the stock to $1.36 from $2.10 and cut his 2008 profit forecast for the company by a third.

“BlueFreeway will struggle to post an interim profit,” he wrote in a note to clients on Friday.

Its shares fell 16c, to 99c, yesterday, closing below $1 for the first time, having hit 95c. The stock had already slid 25 per cent last month.

I called the analyst at Citibank, Julian Mulcahy, to see if he would talk to me about Bluefreeways’ further rapid descent (which he politely declined), but it’s sort of understandable as the poor guy has just got to work this morning with the news overnight that his own sky has started to fall in. Citibank has its own set of woes and is reeling from a quarterly loss of $10 billion and write downs of $20 billion.

That’s real money. Even for Citibank.

But back to Bluefreeway. This gig is going to get harder to sell. And harder to raise further capital to acquire more assets. No street smart owner of a digital group is going to want “equity” in a new world order company whose share price has plummeted like a falling anvil.

The smartest guys in all this are guys like Dominic Carosa, from Destra. He sold his hosting company to Bluefreeway for $20 million - $18 in cash and $2 in stock.

Now thats smart.

Image courtesy Asterix & Obelix, Underzo

Who cares about being politically correct. To be honest, I’m fed up with it. I grew up with Xmas and all this post is about is wishing all of you a safe, happy and prosperous new year. Merry Xmas.

Normal service resumes 7th January 2008!

I was speaking with a marketing manager today and we were discussing her CEO’s concern regarding a recent collaborative email broadcast we conducted for them last week, with another client. Never mind the detail. Here’s the crux of it.

The CEO was concerned at the high level of “undeliverable” emails and also “unsubscribes”.

We drilled into their email client and immediately saw the problem.

The last email prior to last Thursday’s broadcast was sent out on the 30th September this year. The one prior to that in April. So, their sum total of their email marketing efforts came to a whopping total of 3 broadcasts. For their entire year.
It can’t be that hard - can it?

This company has a database of some 30,000 people. Predominantly women. All active buyers of their product. They are “ripe” for marketing. And in this time poor, cash rich environment, are for the most part, screaming out for more convenient ways to buy and interract.

3 emails in a year won’t cut it. It’s hardly what you would call “engagement” is it? May as well not do anything. You’ll always get undeliverable rates in excess of 15% of the total base if you keep this up. And single digit click thru rates.

Why?

Because your customer has forgotten you. Period.

I think way too many people within the email marketing industry get too carried away with throwing a large bucketful of metrics at their clients, all the while forgetting one key element. Clients then rave about CTR’s (click thru rates), open rates, subscribe method, follow up totals, etc etc.

If you ask me - there are only 2 real metrics that matter. Frequency. And Conversion.  How often do you communicate with your email base and much do they buy when you do?

PS. I couldn’t find the right image to put in this post. I wanted to use this, but I thought it might offend some folks.