Editorial: Happy New Year - I don't think so

There's not a lot of good news so far. We realise that 1999 has just begun, but since we knocked off for Christmas to gobble oversized birds, scoff mince pies and swill gallons of waistline-friendly beer the warnings arrived. December had not even come to a close before some of the biggest players started mumbling about poor fourth-quarter financials, which prompted a bit of a share slide with other channel players. New Year resolutions of higher profits, like smoking fewer cancer sticks, are already under threat.

Ingram Micro led the charge in the US, claiming sluggish sales had squeezed profits. The effect on shares was severe, with prices dropping dramatically by $12.63 to $33.63. This was followed by one of Computacenter's US partners Inacom, which also saw its shares fall by $3.75 to $15.18.

In the wake of these announcements, the share values of Tech Data and MicroAge also took a small downturn, while Deutsche Bank Securities devalued its ratings for both Ingram and Tech Data. Not exactly the situation that any player in the channel wants to greet on the first day back at work, but, if anything, it bears out some of our predictions (PC Dealer, 6 January) for the New Year. People might talk about the recession in terms of 1999, but it's clear that the economic rot kicked in during the latter half of 1998.

There's been quite a bit of movement in the networking sector in the first week of the New Year. Compaq's networking division has been overhauled, with commodity items being sidelined in favour of selling high-end equipment and services. It signals a U-turn for the PC giant, which had claimed that the SME market was ripe to flog serious amounts of networking kit to.

Sticking with networking, things are looking shaky for Cabletron. Having just announced a larger-than-expected drop in revenue for its third quarter last week, the company is now allegedly seeking a buyer with $2.5 billion to spare. With the Harrods sale in full swing, it's doubtful anyone will have 2.5 pence. Cabletron's chief executive has said it is not up for sale, but he said the same thing last time when Compaq was rumoured to be interested - so interested, it bought Digital instead. It has to go soon though, as networking minnows don't stand a chance. A Cabletron sale should see a total shake up among its UK channel partners - not exactly what they need at this time of year.

The only sliver of lightheartedness on the way is Apple's plans to turn its iMacs into Opal Fruits. Reports from the MacWorld show has Apple interim chief executive Steve Jobs promising to introduce five more colours of iMac casing to the current translucent blue: blueberry, strawberry, lime, tangerine and grape. Jobs joked: 'We think one of the most important questions asked when people buy a computer will be "What's your favourite colour?".' As long as they don't ask how many applications run on the iMac, Apple should be fine.