Folks I have just been reading Anittel's FY13 report (I hold...

Folks I have just been reading Anittel's FY13 report (I hold BigAir) and I doubt these guys are going to get it done.

Reasons:

Throwing money at cloud infrastructure "Build and they will come". Problem is I can start a Cloud MSP tomorrow out of my living room using AWS and some virtual servers. $2.3M spent in FY13 on cloud infrastructure. What does that mean? I'm guessing a lot of Cisco, VMWare, EMC. Just like every other cloud provider out there, reinventing a wheel AMZN has already made for 1/10 the cost. More money to spend in FY14. How much? Management aren't telling.

Signed a couple of giant Govt contracts. I've seen far bigger firms choke on contracts this size, they could easily have bitten off more than they can chew. The TAS contract is for 2 years. Will they get their money back in that timeframe?

Telco business sold. Ashton isn't stupid, he's getting a deal from a distressed company, meanwhile AYG's product business dropped 18% in FY13 and will continue to do so.

High costs. I doubt they can get enough Managed Services/Cloud revenue until hitting the wall. Retaining and optimising the Telco business may have helped them transition.

FY13 presentation is very low on forecast numbers, I expect another 20% drop in the product business, and lower than anticipated growth in managed services. The sales cycle is longer and the sales people need to get used to selling against completely different business drivers.

I currently work for an IT company transitioning to cloud/MS and we haven't needed to make nearly the investments AYG have. I have also worked in telco. The article I wrote on the acquisition is here: http://www.asxvalue.com/2014/02/17/bigair-acquisition-of-anittels-telco-division-bgl-ayg/

I don't know AYG's business intimately but the picture is not good.