why so quiet, page-8

Hi PP,

I could not leave you ignore for more than a day, I missed you.

Great reply, well thought out and really addresses the points raised. Great work!


Just a few things if I may......

Anecdotal evidence by way of proven massive losses from ENG & FRE do seem to indicate that designing and running your own dedicated VOIP backend is not cost effective as it appears far too expensive to run for a small client base like these companies have. ENG backend appears so far to be a liability rather than an asset. FRE backend is definately a massive liability, no question there. MNF seem to have avoided this problem by buying backend wholesale as required from Symbio, pretty smart move and history has proven them to have made the right choice given their recent profit announcement after just 2.5 years of trade.

Technically and according to the last ENG 1/2 yearly, ENG is in debt to the tune of $4.46M. Is there some reason that makes them appear to be in a better position than MNF? In that same 1/2 yearly ENG report they reported a loss of $3.1M for the six months to Dec 08. Please do not forget the accumulated losses and massive share dilution of ENG (now with 638M shares compared to just 52M for MNF). These are factors that need to be considered when making judgements as a whole.

Be fair, you did start this whole fantasy about Symbio transferring it's customers to MNF thing, you did actually infer that the majority of MNF 65,000 customers were magically transferred from Symbio to MNF to artificially create a 100% growth rate so I assumed you knew more about Symbio than I did, certainly it would appear that you understood the Symbio customer numbers for you to make such as statement. I am simply replying to your suggestion that Symbio transferred customers.

If the MNF financials show 50-100% growth rates I really do not think it is yours, mine or indeed the markets right to be questioning it unless you are somehow inferring fraud? The answer to why MNF has such a high growth rate vs ENG & FRE for virtually no marketing spend is pretty simple. MNF has an appreciative client base who refer their freinds and relatives to connect and MNF know how to market directly to those who are willing and ready to take up VOIP services. ENG has been focused on slashing Opex and FRE has been drinking champagne and doign little else. I suspect that iiNet, TPG, Pennytel and others have been achieving similar VOIP growth rates to MNF because they are smart companies, like MNF.

For what it is worth, moving forward, I still remain supportive of ENG and it's apparent change of direction particulalry in relation to reigning in it's Opex and wish them well towards achieving their stated goal of profitibility and cashflow break even in FY09. They have had 8 years to get this right and perhaps now they will? I think they need to address the paltry 1.8% growth rate though in order for that expensive VOIP backend to be better utilized and thus more financially efficient & justifiable.


Cheers

XOXOXOXO