Reseller Action is set to restructure its business model to incorporate application service provision functionality and web licensing following a string of poor financial results.
Sue Murphy, finance director at Action, did not rule out further redundancies as the company reworks its skill sets to incorporate the new departments. It cut 160 jobs in June, reducing the number of its UK staff to 600.
"The company has to balance the books, and it is a cost that we have to bear in mind. Box-shifting, even online box-shifting, is not very profitable and we have to supplement our turnover streams," said Murphy.
"Turnover this year did not return as planned and we were hit hard, particularly in April and May," she added. "The company has spent a lot of money setting up its electronic infrastructure and it became a logical and increasingly necessary step to expand into these potentially very profitable areas. The year ahead will continue to be difficult, but we expect to show improved performance."
For its third quarter ended 31 August, the company reported a pre-tax loss of £6.7m, compared with a profit of £1.4m in the same period last year. Action's UK business reported a total turnover of £277m.
The group's borrowings have also topped £20m, compared with £17.2m the previous year. The figures meant that the company failed to meet the targets that it set out in a profits warning in June.
A source close to the company said: "Action has to make the business positive again and I am quite hopeful that the company will be able to come back to the market in December and give a positive trading statement.""However, it could be a worrying time for the company because of its insurers, who may now reconsider their position after the recent troubles," the source added.
First published in Computer Reseller News
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