IdleAire to eliminate 40 positions

Half the jobs are vacant and just won't be filled

IdleAire Technologies Corp. announced Thursday it was cutting 40 positions in a move expected to save the Knoxville-based company $4 million a year. Half the jobs are currently vacant and will not be filled, according to a filing with the Securities and Exchange Commission.

The filing did not provide details on which positions are being eliminated.

IdleAire spokesman John Doty declined to comment Thursday because of SEC restrictions while the company is considering going public. The company has not said when it plans to go public, how many shares of stock will be offered or at what price.

In its SEC filing, the company said its reorganization will include consolidating various departments and functions, although it did not offer details. Employees affected by the cutback will receive a severance package based on their job and longevity with the company and job placement assistance, the company said.

Although the company has attracted considerable investment since its launch in June 2000, it is not yet profitable.

In its most recent financial report filed with the SEC, the company indicated it would not be profitable until it completes the build out of its national network.

In the quarterly report, which was filed several weeks late, the company said for the nine months ended Sept. 30 it had incurred a net loss of nearly $67 million and an accumulated deficit of nearly $220 million.

IdleAire manufactures and maintains in-cab electrification units for the long-haul trucking industry. The units supply electricity, heat, air conditioning, Internet and satellite TV connections, on-demand movies and even educational videos through consoles that fit in truck windows for a fee. The power units allow truckers to turn off their engines, thus saving diesel fuel and reducing pollution.

As of September the company operated 127 sites in 33 states.

The company also announced Thursday that Tom Badgett, chief information officer, has resigned. Badgett's departure is due to personal reasons and "not due to any disagreement with management or the Board of Directors of the Company," according to the SEC filing.

Assistant business editor Roger Harris may be reached at 865-342-6342.

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Comments » 21

burpee_von_rotweiler_IV writes:

Sounds like IPIX all over again.

sstirrer writes:

Don't know what story you read. The one I saw indicated a savings of $4 million, not $40. Deciding to not fill un-needed vacancies in staffing sounds like good business to me.

knoxtenor writes:

Like many tech companies with a good idea, IdleAire tried to grow their business too far too fast. An aggressive campaign to increase their user base sucked up all the capital, leaving little money for everyday operations. It's just like the story of so many tech companies of the late 90s. A good idea is terrific, but smart money management is what makes a company successful.

DrHelmholtzCoil writes:

qwerty6969, perhaps you should shelve your financial analysis until after you've actually read the article.

DrHelmholtzCoil writes:

So, the savings were actually an order of magnitude lower than you first reckoned, and you say this makes the situation even more dire. But your new analysis predicts the same ~2 week extension for cash?

Did you get your MBA from an on-line school?

BTW, founders get their "big payday" from the equity they hold, which doesn't simply disappear when they leave the company.

DrHelmholtzCoil writes:

"What is your read on the company?"

I think that is difficult to know without knowing how much of the $60M ($85M-$25M) burned in the previous 9 months went into facilities construction and how much current facilities construction is underway.

Clearly, the market isn't exactly ready for an IPO and isn't likely to be for the foreseeable future. That's unfortunate, because the company seems well positioned to capitalize on the green-friendly nature of their business.

Ultimately, I think their success or failure will depend largely on something they have little control over: the health of the market for an IPO. But in the interim, aggressive companies have a way of dealing with hardship and who knows what rabbits might be pulled from the hat?

burpee_von_rotweiler_IV writes:

Thanks for the interesting debate DrHelmholtzCoil and qwerty6969. Sounds like you both have excellent business knowledge. What little I know is what I read from the Motley Fool, Warren Buffett, and from making bad investments in the past (IPIX, original Delta Airlines, Krispy Kreme)

What I have now come to learn by undertaking due diligence like qwerty6969 is that tardy SEC filings, departure of key personnel, layoffs (err...I meant restructuring), precarious balance sheets, supersonic cash burning, and other factors are ominous signs and that cash truly is king. The bad signs don't necessarily mean an organization is going down but they more often than not point to that outcome.

I believe the IdleAire concept is an excellent one even with the threat of onboard auxillary power units now available for trucks. If they can secure another round of "rescue financing" the corporation may be able to survive until it becomes profitable. If not, R.I.P.

aguy#276948 writes:

qwerty has a point-- what seemed like a "slam-dunk" investment a few years ago is looking like a pretty speculative investment now. This area has a history of being taken in by "good story" companies that fail to produce profits (like iPix and Whittle, for example).
Layoffs are not a sign of a healthy company, and certainly not one that will have a successful IPO any time soon. Considering that the average position eliminated carried a salary of $100,000, this means that the company may have been a bit top-heavy already.
Maybe they need to slow down the growth plans and see if they can make their current locations profitable.
I wouldn't be all that concerned about the CIO leaving, though-- it would be more troubling if it were the CEO or CFO. Badgett might have just gotten a better offer elsewhere.

DrHelmholtzCoil writes:

When it comes to startups, there are no "slam-dunk" investments. Very few companies even make it to IPO, so you'd have to acknowledge that all of them are speculative investments.

It's hard stuff. But you have to admire the folks who give it a shot, because they're made from the same stuff that built this country.

DrHelmholtzCoil writes:

in response to DrHelmholtzCoil:



Just testing the "reply to" link.

aguy#276948 writes:

Thanks for the info on Badgett, querty-- I was not aware that he was one of the founders. Perhaps he was bought out by the other founders due to disagreements over the direction of the company (like possibly growing the company now vs trying to earn profits now-- I'm just speculating there, of course).

Virgil_Tutwiler writes:

How does a company get so much in capital infusion with a flawed business model.

Profitability would seem to be 10 years out or more depending on life capacity of equipment.

Liabilities in this industry are huge.

The concept of an IPO now is laughable even before the moarket destabilized in last 6 months.

The tech crash killed any chance this company can survive for long

DrHelmholtzCoil writes:

in response to Virgil_Tutwiler:



Liabilities in this industry are huge.


The tech crash killed any chance this company can survive for long

"How does a company get so much in capital infusion with a flawed business model."

I'd be interested in hearing more about exactly what flaws you find in their business model.

manutd writes:

A little perspective from the user side. I drive OTR for one of the country's tight fisted mega carriers.

I am an infrequent user of Idleaire in general and when I do use it is is only for internet access, which is actually a pretty fair deal and the least expensive service they provide. (WIFI is readilly available in most truck stops with or without Idleaire so it's not their's exclusively.) The remaining services, heat/air, movie downloads, basic and premium TV feeds are all available a la carte and can run the bill upwards of $12/visit. When you compare that to idling at say $3.25/gal it sounds like a good deal but keep in mind that in typically moderate climates the need for idling is reduced considerably.

In any event, the $15,000.00 parking spaces are going to be occupied regardless of the level of service selected. Let's say Idleaire has been on the ground for 2 years. It has only been in the last 8 months or so that they have been aggressively restricting parking in their spaces to trucks that use any of their services at all. When it comes to WIFI users like me, I need only say that I'm using it whether or not I'm using it. The window unit (the evidence) isn't necessary for the WIFI. Once a squatter successfully commandeers an Idleaire slot there is basically no way to kick them (me) out.

From an ethical standpoint, there is a shortage of truck parking nationwide and in every case I can think of, Idleaire has displaced free parking. We still buy fuel, take showers and eat at the truck stop restaurants and still feel entitled to a parking spot.

My company and it's legions of squinty eyed bean counters hasn't embraced Idleaire, ie no company account and no reimbursement when I choose to use it on my own. Either they don't perceive a value here or they think we drivers are going to step in and deliver the value for free. I think they know better.

Fred777 writes:

Having used IdleAire a number of times I can tell you that the equipment is already in bad condition. I think they would have to replace many of the units even before they become profitable. At the sites they are always pushing the "gold membership" so they can raise money, but they don't care if the "gold members" ever come back to IdleAire once they get their money. Also, the morale is very low which leads to high turnover of their employees. The management at every level is very amateurish.

straydog writes:

WHAT A SHAM! Install all this extraneous hardware in truck stops then power it with the same, polluting, nonrenewable energy. Electricity in the US is powered by 91% nonrenewable fuels. This sounds like some kind of pyramid scheme to me, throw a quarter of a billion dollars down the tube then sell out to a bunch of small investors who think it’s going to be the next Google.

purpleroadking01 writes:

What amazes me is that they have ads all the time in and I've applied for ENTRY level position, with years of office experience and they still won't call you back or offer you an interview!

So much for them helping out Tenn unemployment rate! Let's lay off more people! GREAT

Tennman37871 writes:

What some people don't realize is the fact that if a company is laying off 20 people in upper end positions, then they are trimming "fat" that they shouldn't have had to begin with. Top that off with the fact that some sites are lucky to be filled with 25% of the people parked there actually using the service (trust me on these numbers, i know what I am talking about). Now add to that a huge turn over rate for employees that work at the actual sites (and it costs money to train new people each time) and you are honestly looking at a recipe for a disaster.

I give them till the end of the year before they start closing sites, laying off more people or going belly-up all together

MadVol writes:

Some factors preventing IdleAire from being succesful to date:
-The Company pursued funding through TIFIA, a govt. organization,ignoring or not aggresively pursing at the time other sources (the TIFIA cost of capitol was very low). When the spike in fuel costs occurred IdleAire did not have the network in place to capture a market looking for alternatives to burning fuel while idling. Fuel surcharges were quickly adopted & the APU market benefited, not IdleaAire. This opportunity was lost and may be the biggest reason for IdleAire's failure to date (the TIFIA funding did not materialize).
-The product is "tehered". You have to go to a facility that offers IdleAire and then find a space not occupied. The trucking industry is not looking for something that further complicates their logisitcs. APUs are portable (with the truck) and do not complicate the logistics.
-The cost of APUs is coming down and the quality is increasing.
Some factors that may make IdleAire succcesful:
-Turning trucks off does reduce polution which, if accurately measured, may create energy credits that may prove a strong source of income.
-Manufacturers have the ability to produce trucks that are hybrid (This option adds to the cost but it is quite reasonable compared to the cost of the entire vehicle). They can be turned off while stopped, plugged in electrically, & all the devices on the truck work. The difficulty is delivering that electricity to the vehicle safely & efficiently. IdleAire has the safest delivery method as it is delivered from above eliminating the risk of shock/electrocution by having wires on the ground. The challenge is to sell this electricity in a profitable manner to the Customer in these hybrid trucks (eliminate the offering of HVAC, TV, etc.. & focus on electricity delivery only).
-Electrified parking lots could be used for automobiles as well. As electrified cars become more prevalent they could be plugged in at the mall, Walmart, etc.... This would be a siginificantly larger market than the trucking industry. IdleAire may have the edge in this industry as they are the "experts" on electrifying parking lots.
-Eliminating/significantly reducing idling will positively impact the environment and the health of the Drivers in these trucks parked at truckstops breathing these fumes (the 91% non-renewable fuels used to generate this electricity is produced much more efficiently/less pollution than idling a 400 horspower diesel engine to run a TV and have HVAC).
All that said, after 8 years as a "start up company" they have yet to turn a profit. Going "green" has to mean $'s as well.

rauchy writes:

The concept is flawed.

All of the things provided by their installations ranging from computer access to heat or AC will be provided by on board systems cheaper than the company can provide.

There are small generators to provide power to systems no unlike those found on RVs that use very little fuel to power all of the things IdleAir can provide. Technology is moving so fast the company is out of date.

SylvesterMarcus#231107 writes:

Shall we say "Stagnant Air?"
