Equanet "quietly confident" of future course

DSGi division: Equanet is focusing on creating a steady long term business

Large account reseller Equanet has hit its latest targets and is steering a steady course for the rest of 2009 despite recent layoffs and the financial troubles of listed parent DSGi.

Speaking at an Equanet customer event at the Vinopolis wine museum in London, the reseller’s managing director Martin Dorchester said he is “quietly confident” the company is best placed now to see out 2009.

“As a business, we have delivered the numbers that we set out to get. We are delivering,” Dorchester said. “This time next year, we are confident we will still be sitting here.”

He said Equanet did better than it expected in the new year. However, he could not reveal specific Equanet figures beyond what is reported to the London Stock Exchange as results for the DSGi Business division.

The unit reported revenue of £397m in the 2007-08 financial year, down from £406m in 2006-07, and is continuing a focus on customer service, training and development initiatives for staff.

Underlying DSGi Business operating profit was just £51.2m in 2007-08, compared with the previous year’s £96.4m.

Parent company DSGi did less well – reporting a like-for-like group sales fall of 10 per cent in the 12 weeks to 10 January – and has struggled against the loss of backing from major credit player Euler Hermes.

Dorchester confirmed that Equanet had laid off 15 staff at the beginning of the year as the operations of two regional offices were moved back to base.

No further restructuring or staff changes are planned, Dorchester said.

“Rather than being the bog-standard box droppers we are often accused of being – we prefer the phrase ‘transactional excellence’ – we are expanding what we know and showing what we are truly capable of,” he said. “We are creating a sensible long-term business.”

Dorchester pointed to the Vinopolis seminar event, which showcased vendor solutions and brought customers and partners together, as an example of its deeper engagement – putting customer needs first instead of merely trying to sell specific product.

DSGi in its annual report blamed the DSGi Business unit profit contraction on increased marketing activity and a need to get rid of old stock, as well as a rise in low-margin hardware sales and weak consumer sales.

The company in February announced plans to shave another £20m from its overall cost base in fiscal 2009 to combat falling sales.

John Stevens, sales and marketing director at Equanet, said the reseller's vendor line-up would remain the same, commenting: “We have a number of strong strategic relationships we are developing.”

Equanet is looking to virtualisation, cloud computing, green technologies and managed services offerings to do well this year and beyond. Anything that helps customers cut costs will be in demand, Stevens said.

Market analyst IDC’s latest figures confirm this view. Overall IT spending in Western Europe is tipped to grow 0.1 per cent year over year in 2009, down from a November forecast of 1.2 per cent growth.

Hardware will be worst hit, with software and services tipped to grow somewhat. IDC expects IT spending in the UK and Germany to remain essentially flat in 2009, but France and Italy IT spends will actually shrink.

Mette Ahorlu, consulting director at IDC European Services, said that UK companies have reviewed their IT spending plans carefully as a result of the economic crisis.

“However, it is not all doom and gloom. Fewer new projects will start, but projects that address crisis demands, such as cost-cutting and work process efficiency with a short-term horizon, have a good chance.

"Also, projects relating to post-merger-and-acquisition IT integration and global integration of companies’ IT environments will fare best,” Ahorlu said.