The bottom line really is this. Senetas is in its current position primarily because of the inertness of this exclusive (US) agreement with Safenet in the first place. The customer target through this US based association was the obvious potential with US Govt agencies such as Depart of Defence.This was I suspect the driver for doing the deal in the first place. As often happens,Safenet promised the world (refer TAM data released earlier) but were unable to deliver the sales that they forecast. This was not good for Senetas. The deal was binding and gave SEN absolutely no flexibility in the procurement of other product distribution channels. Hence the modification of the agreement some time ago to allow SEN to target other distribution channels but at the same time to honour the terms and conditions of parts of the original agreement. This was the point at which SEN realised that they had a problem. This period of inertness was in fact the period of first mover advantage for SEN which does appear from indications, to have all but evaporated. It is now an even playing field and the competition is alive! This brings us now to the current decision by SEN to terminate this inert agreement that was proving quite fruitless and therefore impacting on SEN revenue. By the way, for those who attach their lives to conspiracy theories, it can not be fully discounted that Safenet who were at the time selling similar security network products to their existing customer base in parellel with this exclusive distrubution agreement, were at the time paying SEN a 30% royalty for the sale of the SEN technology product. Not surprising some might say that the volume of SEN product did not quite come up to the figures promoted by Safenet in the first place to secure the exclusive deal for the SEN technology. Funny about that, I remember every one was so excited at the time about the "amazing"30% royalty structure secured and given the Safenet TAM projections, SEN was clearly headed for the stockmarket heavens. Enter, good old Murphy's Law. Business at best, is sinister, full of self interest and totally driven by generating the best return for equity owners. That is not a social comment, just fact. Senetas knows this more than any group right now. So we have come the full circle. Back to square one but I suspect that there is a considerable amount yet to play out in the SEN story. Quite frankly, this has to be the most exciting thing for Senetas now. Their commercial licensing structure is now, courtsey of this latest event, the strongest it has been and opens the way for SEN to fully leverage its technology product through a multi distribution channel platform. By getting rid of the underperformer that has made it an underperformer itself is akin to cutting out the cancer that will eventually kill you. Exclusive agreements are for groups that accept the terms and in doing so, can do no better than watch others excecute the sales for them! If the seller fails, so does the group! I suspect that this may have been in the back of the mind of FG and RL as they clutched to the potential of those TAM forecasts. But now we have a new hands on CEO who knows this industry and the key players in it. Senetas now has the world open to it to fully exploit their multi tiered distribution strategy that JDB has been configuring since his arrival. For some posters to suggest that he is an underperformer because the shareprice has gone down is simply an embarassment to anyone with the most miniscule amount of cerebral matter. This company has excellent potential imo, more so now than when it was trading at 90c sometime ago.
ciao
SEN Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
