Hyro and Blue Freeway continue the fight

blue-freewayhyro2Two digital marketing firms that rode high in Australia’s business stratosphere are continuing to struggle, updates to the ASX have revealed.  

Digital marketing and technology company Hyro published an announcement to the ASX yesterday in which it revealed a restructure following the company making a loss in 2008. And Blue Freeway is continuing to lose significant amounts of money, it revealed in an ASX posting.

In the update, Hyro said it had reduced costs and restructured “in response to the poor results delivered in 2007”. However, it still made a full year loss for 2008 “because of unusual and unexpected external factors which had a material, adverse influence on the business”.

The company, which in early 2007 saw its share price peak at above 30c, is now trading at $0.016.

It said that a restructure included “merging” its Hong Kong business unit with technology firm Avartis to create a new entity with presences in Hong Kong and Singapore in which Hyro has a 30% share.

Meanwhile Hyro’s loss-making New Zealand and Chinese businesses has been closed. And Hyro’s Thailand office will now be its “primary centre” for Asian operations, and it will “draw on Australian and local capabilities”.

One of the factors that hurt the company in 2008 was Bill Votsaris, currently the company CEO, being caught up in the collapse of stockbroker Opes Prime where he had a margin loan. The update also reports that: “The uncertainty generated by the collapse of Lehman Brothers Inc. and the resulting speculation that the collapse would have severe consequences for the company, impacted on customer and partner confidence during the second half of 2008. As a result, Hyro experienced lower than expected levels of revenue for several months as customers either scaled back, or deferred activities.”

 The company said that reaching a deal with the Lehman Brothers receiver had improved the situation although it would still report a loss for the full year. The settlement included yesterday issuing 80 million shares in the company to the receiver. It added: “The company will not be providing revenue guidance or forecasts for 2009.”

But it attempts to offer an optimistic note: “Despite widespread cutbacks in advertising and marketing expenditure, a number of indicators suggest that many of these cutbacks will result in a shift of remaining budgets to, and increased reliance on, digital channels for online marketing, electronic commerce and customer service. Hyro’s digital services offering is specifically targeted to these requirements of large corporations and government agencies. Over the last few months, Hyro has enjoyed strong levels of enquiry from both existing and new customers and has been successful in a number of bids and proposals which supports what the indicators are suggesting.”

Meanwhile, Blue Freeway has shown little sign of turning the corner in its latest update to the market, showing a $7.5m loss for the first six months of the financial year, and $1.6m loss for the quarter to the end of 2008.

The update also shows that Blue Freeway’s sale of its digital branding firm Deepend back to its original owners including MD Matt Griffin at the end of last year, saw the company receive just over $1m.

Blue Freeway, which was founded in late 2006 by entrepeuneur Richard Webb, currently owns around 16 companies, compared to around 25 at its peak. They include PR firms Spectrum, Max and Spin, design agency Holler and performance marketing company Viva 9.

Webb was ousted in February last year, with Michael Hannan – the former owner of magazine house the Federal Publishing Company – taking a major stake in June.

Blue Freeway shares are currently trading at $0.015 compared to a peak of $2.40 in mid 2007.

Update: Bannerblog has more here.


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