MDSI brings back Eric Dysthe as CEO to help implement restructuring plan

Mobile Data Solutions Inc (MDSI) has brought back one of its founders to guide the company’s financial recovery after several quarters of high costs and lower than expected revenues. The return of Eric Dysthe as chair and CEO was one of several sweeping changes made last month to the executive ranks and operations of the Richmond BC-based company (RoW, May 14/01). Dysthe cites several reasons for the company’s financial woes – losing touch with customer needs and becoming too inward as a company. A delay in the launch of MDSI’s latest mobile workforce management system by about one year also contributed to the problems. The Advantex r7 was based on a completely new design and open architecture which took longer than anticipated to be completed, he explains. Expenses out grew revenue "One of the problems I had with the company was that growth hadn’t been there in the last couple of years," says Dysthe, who served as CEO of MDSI from 1993-1996. "Part of that was due to the Advantex r7 being delayed, but in the meantime expenses had gotten totally out of whack with the revenue coming in." By 1998, the company had grown to about 420 employees with annual revenue of approximately US$48.4 million and a net income of US$3.78 million. At the end of FY00 and before restructuring began, revenue hit US$61.5 million with a loss of US$554,000 with an employee base of about 600. The results didn’t sit well with the board. "We knew we had to take some pretty drastic measures," Dysthe told Report on Wireless. The first order of business was to put Dysthe back in the driver’s seat and promote Jerry Chan to the position of president and COO. The next step was to take a broad review of the company to identify how to bring costs more in line with revenue. As part of its restructuring plan, MDSI plans to gradually cut spending this year, resulting in an estimated $2.9 million in cost reductions per quarter by the first quarter of 2002. The biggest cuts have been in staffing, with a 25 per cent reduction in the overall workforce. The strategy also calls for a return to basics with a renewed focus on the customer. "We have always strived to provide better products and services than anybody else in the industry and we wanted every customer to be a good reference," says Dysthe. "Unfortunately, we’re not in that position today, but we bloody well will be again I can assure you." Pieces of the restructuring puzzle almost all in place The company hopes to have its expenses under control by the end of the year. Savings of US$2.9 million per quarter, announced in the restructuring plan, will be realized throughout the rest of the year through the gradual reduction of its workforce. Taking a hands-on approach to sales and new revenue streams is expected to take up a lot of the chair’s day. "I’ve always been very customer focused in my approach and I think that this company had lost that, so I’m going to make sure that we get back to that again," he explains. With most elements of the restructuring plan now in place, Dysthe is optimistic that things will turnaround for the company. "I think that the company is better positioned today than we ever have been in terms of the products that we have today with the Advantex r7 ASP model and the e-Service model as well," he says. "We can provide the full functionality of the r7 from the very biggest of enterprise stand-alone systems for very big telcos and utilities to the very smallest on the hosted system." The prospect of being able to work with big partners such as Acenture and IBM is also a boon to the company, says Dysthe, adding that the new standards-based open architecture of the Advantex r7 enables these partnership agreements. Additionally, the ASP model should allow MDSI to expand the customer base by having companies that don’t want to make the capital investment in infrastructure purchase the solution.

MDSI brings back Eric Dysthe as CEO to help implement restructuring plan

News | 06/11/2001 4:00 am EDT

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