Monday, 24 November 2008

Phoenix loses CEO

(By Anthony Miller) Support services firm Phoenix announced that CEO Jeremy Stafford has left the building and non-exec. deputy chairman, Nick Robinson, is once again to take the reins. Stafford was promoted from COO to CEO in March this year having joined Phoenix in April ’07 after a long career with BT. The multi-faceted Peter Bertram remains Phoenix’s executive chairman. With no further reasons given for Stafford’s departure it’s natural to assume that all was not going well within the executive team. If so, this did not appear to prejudice Phoenix’s half-year results, also announced today (see here).

Support services mainly fall into the ‘non-discretionary’ category of IT spending – after all, if the kit’s broken, it’s got to be fixed! But these services have become commoditised, most evident in Phoenix’s Partner Services (subcontract) division, where 11% revenue growth (to £54m) was accompanied by a 320bps margin decline (to 15.0%). The May ’07 acquisition of ICM seems to have helped, though, boosting margins at Phoenix’s mid-market and business continuity divisions.

Phoenix has pitched its strategy tent in the market for both large outsourcing contracts and niche IT services. It’s tough to play both ends of that spectrum and make them work well. The business models are rather different and it’s difficult to see the natural ‘synergies’. Nonetheless, Phoenix came from a pedigree stable (Jon Moulton’s Alchemy) and knows its markets, so let’s see how the game plays out.

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