Single figures coming, page-41

Somehow my response disappeared so here it is

It’s sort of amusing that we should be reading commentary that Nick and Gavin got the product out there. I think that enough water has passed under the bridge for that to be able to be challenged. I think there is a difference between giving products away as it now seems happened, and selling them.

Anyone knows that loss leaders are a silly way to go. But that’s effectively what happened it seems. If you compete on price you don’t compete on value. If you don’t compete on value and you’ve adopted a low price strategy, at some stage you have to find a way to crawl out of the problem you’ve created. I believe that’s all that we are seeing now - with a clear effort directed at differentiation and establishing value. That is the best pathway to value based pricing.

I thought it was pretty clear by now that the line we were spun about volumes, margins, customer numbers, revenue predictions, PhDs, contracts in Europe and a matrix of sales agents around the world created only a web of confusion, distress and near death. I don’t think anyone can argue convincingly that the products were “out there”. Where? Who was buying? How much? I did some calculations at one stage while I was trying to get my head around it all and, if you took their stated customer numbers, the average sales revenue per customer was between $70k and $250k depending on which of the many versions you looked at. Then look at the margins. So it made no sense at all.

Each bit of unravelling I tried led to more doubt and more unanswered questions. So it is somewhat surprising to read your post because I had thought you at least tried to take an analytical approach. Maybe I was wrong.

As to the commentary that the company can’t afford to pay its management and directors. That too is a surprising comment. Even in the US it’s illegal not to pay employees. I think you might find that all employees are getting paid into the bank accounts as agreed in their contracts. Further I’d suggest to you that if they hadn’t been paying appropriately they would have been unable to attract new employees at senior level.

I think Sue also explained perfectly well why they were taking performance shares in lieu of remuneration. I think it’s unlikely that someone of Rasheen’s status or with the tough reputation that Sue has or the legal experience of Claire Poll would take on a contractual arrangement that will lead nowhere and return nothing. In fact wouldn’t they have been more likely to take what they could while the going was good?

As for shareholders being concerned. I think to some extent if you’ve travelled for long with Alexium you would be - but I am much less concerned now than I have been for a long time

P