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Microsoft terminates EOH association. 

The tech industry is often surprising and decisions which seem to come out of left field can sometimes be a daily occurrence.  

According to an article on techcentral.co.za, Microsoft has terminated its partnership agreements with EOH.  

Bring in the mystery machine.

The TechCentral article reports that mystery surrounds a decision by Microsoft South Africa to terminate two partner agreements with JSE-listed technology services group EOH. 

TechCentral learned on Monday that Microsoft served notice on EOH Mthombo on Friday that it plans to terminate the company’s Licensing Solution Provider agreement and its Microsoft Partner Network agreement. 

EOH holds the Microsoft agreements through its EOH Mthombo subsidiary. The agreements expire 30 days from the date of the notice of termination. 

Addressing the issue.

EOH Holdings CEO Stephen van Coller is scheduled to lead a meeting with representatives from Microsoft on Tuesday afternoon.

The TechCentral article points out that a Microsoft South Africa spokeswoman confirmed on Monday that it served notice on EOH on Friday but said the company cannot comment on the reasons for doing so, citing confidentiality. 

EOH Holdings head of investor relations Debbie Millar also confirmed that the agreements had been terminated by Microsoft South Africa but said that the group has not been given reasons by the software giant. 

“We are engaging with them to understand their decision,” Millar told TechCentral. EOH Holdings CEO Stephen van Coller is scheduled to lead a meeting with representatives from Microsoft on Tuesday afternoon to discuss their decision, she added. More clarity is expected to emerge after that meeting. 

No direct access.

Millar said Microsoft is an important part of our application ecosystem. However, she emphasized that the software company is just one of more than 50 partners, which GTconsult is a proud member of, that the group works with. 

The article adds that the termination of the agreements means that, unless they are reinstated, EOH will no longer have direct access to Microsoft products and services. Millar added that EOH could still partner with a Microsoft reseller, though she conceded this would be a less acceptable route to market. 

EOH, she said, has already started implementing a plan to ensure there is no disruption to the group’s customer base. 

“We are very committed to resolving this in a way that meets our and Microsoft’s requirements.” 

A rocky road.

Businesslive.co.za reported that EOH lost a massive R3.5bn in market value in two sessions in March 2018. This was after allegations were brought up against them in late 2017 regarding procurement irregularities. Amidst the allegations and massive losses, they were once again making headlines for all the wrong reasons.

In July 2018, africanews24-7.co.za published an exclusive report on EOH detailing how its executive directors have been blacklisted by government.  The article exposed how the executive directors have been blacklisted from doing business with the government due to a breach of contract after the National Homebuilders Registration Council (NHBRC) and the National Treasury placed the company on the database of restricted suppliers.  EOH have since been removed off the blacklist.

As explained in detail by africannews24-7, the blacklisting led to a massive change in leadership in the company.

After news of Microsoft’s decision to terminate their association and partnership with EOH, EOH shares have plunged by 34%.

Our final thoughts

The good and bad about being a listed company is that no matter how well the talented employees perform speculation can rock the share price.

“EOH has been a market leader in the industry long before we even started out, its such a pity that a few rotten apples have made such a negative impact.  I am positive that the hardworking talented people at EOH will be able to turn this around so we can get back to business as usual.” Bradley Geldenhuys CEO GTconsult

UPDATE.

As they say in the classics, where there is smoke, there is fire. It turns out that Microsoft canceled their contracts with EOH after an anonymous whistle-blower filed a complaint about alleged wrongdoing involving a South African Department of Defense software procurement deal with the US Securities & Exchange Commission (SEC).

TechCentral reported that it has seen correspondence that corroborates this and spoken to well-placed sources who say the whistle-blower lodged the complaint with the SEC at the end of November 2018. At the same time, the whistle-blower, through a firm of attorneys, wrote to Microsoft’s board of directors, asking it to investigate the matter and take appropriate action, the correspondence shows. The allegations centre on a contract, worth R120-million, awarded by the Department of Defence in 2016 to the EOH subsidiary, EOH Mthombo.

 

This is a developing story that we are closely monitoring and we will update you as soon as we hear more.