Trouble at Vu

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Trouble at Vu

Got an email that VU dumped their entire sales force this week! The email went on "They are in dire financial trouble and their CEO is facing prison for insider trading for his sale of his stock as CEO of Zenith Infotech prior to their sale to Summit Partners."

Not sure how accurate it is but Vu TelePresence is part of the Zenith World Group of companies. Summit Partners put some of their capital into Zenith Infotech spinoff, Zenith RMM, a remote monitoring service. The cash infusion was necessary because in 3Q 2011 Zenith missed a bond payment which sent speculation that the company was in trouble. The company says everything is fine and the cash will be used for acquisitions.

I don't know. "Today, nearly 3,000 MSP partners use the Zenith RMM platform to manage almost 400,000 endpoints." Do the math: that's about 133 endpoints per partner. How much can that bring in? Many Master MSP's have changed their business model because it takes scale to make money running your own NOC and being a wholesaler of service. But also that same scale can kill you -- too much payroll to make a profit. Zenith RMM recently changed its name to Continuum, probably to distance itself from the legal entanglements of its parent.

Zenith Infotech had a bad quarter too. "The depths of Zenith Infotech's financial troubles are becoming clear in its latest quarterly earnings statement, in which it posted a year-over-year loss due to declining sales and unstable foreign currency exchange rates," according to Channelnomics. Apparently, quarterly revenues in USD are about $10M and the sale of RMM was about $8.7M. I don't know how VU Telepresence fits into this picture. I do know that undercutting your price to take market share requires deep pockets and that's what VU was doing against Cisco gear. Lower price means less revenue and virtually (get it?) no profit. That doesn't help your cash flow issue. And all this press doesn't help you gain partners to sell more of your stuff.

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