SiGEM divides into three business units to better serve existing customers

SiGEM Inc is reorganizing into three separate business segments and cutting staff to bring the company back into the black by its fourth quarter. The satellite positioning technology provider is also pulling out of the application service provider (ASP) business to avoid competing with its clients. Planning for the reorganization began last month when the company hired Paul Bennett as president and COO (RoW, Aug. 7/01). Working quickly, Bennet decided the company needed to immediately cut spending and took steps to reduce its global workforce by 16 per cent. The Kanata ON-based company also plans a sales and marketing blitz for its new business segments: taxi fleet management systems, telematics and modules. The taxi group commands a 30 per cent share of the global market for computerized dispatch systems. Telematics will continue to concentrate on providing mobile devices and systems software to selected vertical markets. The module business supplies GPS receivers and antennas to original equipment manufacturers and systems integrators. The restructuring should help SiGEM to better target its primary markets and turn a profit sooner, says CEO Herb Woods. "The next step is to implement the strategies behind these business units and bring revenue back up, while holding these trimmed costs." No decision has been made yet on who will lead the three units. Woods says an internal and external search has begun although he couldn’t say when a decision would be made. The company’s main priority over the coming months is to become cash flow positive before the end of the fiscal year. "Our goal (is) that the company will be profitable in Q4 and we’ll have a positive cash flow by the end of the year," Woods told Report on Wireless. "Not necessarily by Q4, but on a monthly run rate, it’ll be positive by the end of the year." The staff cuts were viewed as a necessary evil to bring down costs over the next two quarters. "What it does is bring our expenses in line with the level of business we are expecting through these two (third and fourth) quarters in a slower market," says Woods, adding that many of the laid off staff could be recalled once the company’s financial picture improves. Exiting ASP business SiGEM also announced Sept. 13 that it would be exiting its recently launched application service provider (ASP) business, dubbed ePing FleetMonitor. The company realized quickly that it wasn’t so easy selling hardware, software and communications systems to customers that now viewed the company – not only as a key technology provider and supplier – but also as a competitor. "What we were finding was that more and more we were competing with our customers," says Woods. "And a lot of our customers were in fact ASPs themselves." As for its ePing FleetMonitor system, the company will focus on using it in-house to run prototypes of new systems. Initially, having an ASP business unit proved useful for testing products. Now the company will use it to run customer trials and conduct product demonstrations for potential clients. Woods hasn’t ruled out licensing the product to others that may want to build a business around it. "We are going to license the product we have to various people," he explains. "We want to enable people to be in that business, but not be in it ourselves." Weaker results for Q3/Q4 While SiGEM has posted some significant top line growth in its last quarter, the substantial downturn in the market forced it to take some immediate and dramatic steps to keep expenses in line. The company also announced that third-quarter revenue will be weaker than expected as key European customers scaled back orders for GPS modules over the summer.

SiGEM divides into three business units to better serve existing customers

News | September 18, 2001

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