For one second the news of an announcement made me think you’d...

For one second the news of an announcement made me think you’d proved me wrong and I’d have to eat humble pie, but the way this has been handled has been appalling. When the two companies entered into this agreement they must have had some arrangement about how this news would be announced in the event of a no deal. The management team must have known that this was a risk and that a no deal would be viewed as a devastating indictment of the company, what ever the reason an agreement couldn’t be reached.

I think it’s far more likely that CBA felt that they couldn’t get involved with IAM because of the optics of offshore processing rather than any contractual negotiations. IAM continues to be an off shore financial processing company masquerading as a software company. The writing was on the wall for any deal once the bad press about CBA looking to reduce their staffing numbers was out. It’s one thing to do this using fully automated systems (which will eventually happen by the way, the idea remains solid, it’s just that IAM couldn’t pull it off), but something else entirely to lay off Australian workers to send financial work to the Philippines.

IAMs role is likely to continue to be supplying support for smaller, independent and new financial advisers. The one reassuring thing to come out of the day is that there are a handful of FAs writing on here that they use the product and are enthusiastic about it. But it’s important to note how often they’re referring to the Philippines and talk as if they have a personal relationship with Sharon, presumably from the amount of time they’ve spent talking to her.

For IAM to continue from this position, supporting independent FA alone will be a huge struggle. The overheads show no sign of decreasing and the money coming in is hopeless, even with the workload from CBA. It’s doubtful IAM will ever be profitable, let alone make back the $40 million spent to get to this position.

They have limited funds in the bank and a further credit raise is inevitable if they’re going to survive. They’ve issued billions of shares making all but the very top investors contributions meagre in terms of what the company actually needs. A share consolidation has to happen before any talk of a further credit raise. A new investor has to be found that will buy up a large slice of the company for peanuts compared to what you have paid. Any holders should expect a major dilution on top of the devastating effects of how badly the CBA pilot has been handled.

I hope they can turn it around for your sake as well as the other investors but I won’t be surprised if the management team decides to walk away too. Their silence on a day when the share priced burned is deafening.