TTA Limited, the publicly listed company that owns and markets the TEAC brand in Australia, today confirmed that long-standing CEO James Phoon will be departing the company in the New Year. This follows a tumultuous period for the company, in which a major misunderstanding of the market led to million dollar losses due to surplus inventory becoming stockpiled.
Daniel Seow, currently the senior product and marketing manager, will take on the responsibility for sales and operations in addition to his current role, while Chee Ming Wong will oversee finance and administration. Both will report to chairman Sze Hiang Sng.
“I would like to thanks James for his commitment and service over the past seven years, particularly in recent times with very difficult market conditions,” said Sng. “The board wishes James well in his future endeavours.”
Phoon has been the CEO of TTA since the company relisting on the ASX in May 2008. He is expected to assist in the transition to a new CEO and will officially leave the company on 23 January 2015.
TTA’s annual profit for its most recent financial year, the 12 months to 31 March 2014, was $464,270, down 75 per cent on the previous corresponding period ($1.92 million). This sharp decline was attributed to the company grossly overestimating demand for new digital TVs as a result of the analogue switch-off, which was finalised in late 2013.
“While the digital switchover was expected to increase demand for digital services such as televisions and set top boxes, market reports indicated that sales of LCD televisions (in units) had declined by 8 per cent during the reporting year as compared to the previous corresponding period,” the company explained in its most Annual Report to Shareholders. “The shortfall in demand compared to the forecasts by major retailers had a significant impact on the financial performance on TEAC Australia.”
The analogue-to-digital switchover was expected to generate a blitz of interest in new TVs however, suppliers and retailers have both reported that demand wasn’t as strong as forecasted. Reasons for this include the long lead-up period, meaning customers spread the upgrading over several years, rather than in the weeks directly before the switch-off; and the use of cheaper options, such as set top boxes, to receive a digital signal. Futhermore, some consumers simply disposed of their obsolete analogue TVs, choosing to neither upgrade or replace them.
This misunderstanding of market demand led to increased inventory, which had to be cleared during the early months of calendar 2014 through retailer incentives. In addition to having to clear excess stock at reduced prices, Chee Ming Wong also confirmed that the market has not responded well to TEAC’s latest range, saying there has been a “slower response to by [TEAC’s] retailers towards certain new products launched”. This has led to further deleterious effects on profit, with the company projecting a $3.2 million loss for the four months to 31 July 2014. There has been no further update since this notice to the ASX on 18 August 2014.
Departing CEO James Phoon’s salary for the 2014 financial year was $336,314. Phoon also owns 80,504 shares in TTA Holdings, currently valued at just under $3,000. When TTA was relisted on the ASX in May 2008, its share price was 18 cents. Today, it is trading at 3.6 cents. News of Phoon’s departure caused a rally, with the share price surging almost 10 per cent in early trading.
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