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Profit warning from Solution 6

By Phil Boeyen, ShareChat Business News Editor

Monday 23rd October 2000

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Revenue downgrades and restructuring plans have been announced after a period of navel-gazing by the new captain at the helm of Aussie wundertech company Solution 6.

The company's CEO, Neil Gamble, says he has spent the first weeks on the job assessing operations -and he has obviously done some number-crunching along the way.

First to be erased and re-written are Solution 6's revenues, which have been downgraded to between A$320-$330 million for the 2000/2001 financial year. For the first quarter to the end of September unaudited results show an earnings loss before interest, tax and amortisation of A$3 million.

Solution 6's full year forecast, which the company says remains under review, is an Ebita loss of A$16 million.

Mr Gamble says one-off costs will also be incurred in restructuring the company to address profitability and accountability issues and realise savings. He says while revenue growth has been strong compared to the previous year and the customer base is solid, financial performance is not optimum.

"This restructure will ensure that the Solution 6 Group becomes more responsive to the market. I am confident the Group can reach its full potential.

Among Mr Gamble's new reforms are a freeze on all non-revenue generating headcount and discretionary expenditure, reviewing and restructuring all business units currently operating at a loss, and decentralising some departments to give general managers total responsibility for their units.

Mr Gamble says certain businesses are also being considered for divestment, but he has not specified which ones.

Solution 6's changes and profit warning comes on the heels of similar downgrades from a number of other Australian tech stocks in recent weeks

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