Strugglingmobile money groupMonitise(LSE: MONI) has had a rough year. After issuing three revenue warnings in the space of 12months, the companylaunched a strategic review in January andhired the investment bankMoelisto examine all options, including a sale of the company.
At the end of March, Monitise announced the results of its strategic review. The company decided against a sale, after rejecting offers that were deemed unattractive. Whats more,Alastair Lukies, founder and co-chief executive, stepped down following the review.Mr Lukies is being replaced byElizabeth Buse, a former Visa executive.
And in many ways, this change at the top is great news for Monitise and the companys shareholders. Whileunder the stewardship of Mr Lukies, Monitise has consistentlymissed targets, struggled to raise cash and the group has failed to turn a profit.
The appointment ofElizabeth Buse marks the beginning of a new era at the company.UnlikeMr Lukies,a former professional rugby player with little experience in the finance industry, Elizabeth Busejoined Monitise after a 16-year career atVisa.
Ms Buse held a number of senior roles at Visaincluding leading the US payments conglomerates operations outside the US. So, Monitises new CEO has plenty of experience (at one pointMs Buse was considered to bethe leading internal candidate to become Visas chief executive).
Additionally, along with a new CEO, two of Monitises key shareholders Telefnica and Santander have taken up theirright to nominate a board member.
A new, more experienced management team is exactly what the doctor ordered for Monitise. As the company has continuallyfailed to meet its own targets over the past few years, shareholders have lost trust in the companys management.
A management reshuffle should restore confidence in the mobile payments group and bring in a new set of fresh ideas.
Whats next for Monitise?
Now Monitise has a new CEO, the company can re-focus on trying to achieve its strategic long-term goals.
The companyis targeting sales of 90m to 100m for 2015, unchanged from 2014. Losses of 40m to 50m are expected before breakingeven during 2016.
Furthermore, Monitise is planning to streamline its business.This plan includes centralising the groups research and development arm, exiting non-core business areas, and focusing sales in the groups established regions of Europe, the Middle East and North America, rather than pursuing new markets.
These actions should help reduce Monitises cash burn. The company burnt through 63.6m incash during 2014, although with a gross cash balance of 129m Monitise has enough cash to survive for two years, which should be long enough for the companys turnaround plan to take effect.
The bottom line
All in all, with a new management team and plans to streamline the business, Monitises outlook is improving. Still, only time will tell if Monitises new management can turn the struggling company around and I wouldnt expect fireworks from the group any time soon.
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