EDITORIAL: Hard reboot at EOH
The allure of starting afresh can be powerful — wipe the slate clean of past mistakes and reset to zero
The allure of starting afresh can be powerful — wipe the slate clean of past mistakes and reset to zero. Stephen van Coller has done exactly this at IT services firm EOH, writing off intangible assets worth almost R11 a share. That’s no mean feat considering EOH’s share price, before its results were released this week, was hovering at around R13.50. Put another way, EOH impaired almost its entire market value. It’s an acknowledgment that its incredible growth story — sold so convincingly by founding CEO Asher Bohbot and FD John King — was built on ephemera.In a way, theirs was an accounting-approved, market-sanctioned Ponzi scheme: buy a business on a lower p:e, enjoy the earnings boost that it gives, and repeat. It all goes swimmingly until it doesn’t. Now investors, as well as would-be EOH buyers, have to work out what the company is really worth.Under Van Coller and his clean-up team, we have a better idea. NAV, apparently, is R4.6bn. That’s still far ahead of its market cap, th...
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