Reseller Morse is planning to beef up its services division to counteract the decline in its infrastructure business.
The firm announced deepening financial losses in its interim results for the six months ended 31 December 2001, but claimed its results still "exceeded expectations".
Turnover fell by 27 per cent to £226m, compared with £308m for the same period in 2000. £6.8m of this was attributed to acquisitions.
Morse's net loss stood at £6.1m, compared with a profit of £8.3m the previous year. The firm's cash balance was £60.3m.
Mark Byatt, marketing director at Morse, said: "The results speak for themselves in terms of a challenging market. However, we believe we are continuing to gain market share and we exceeded our expectations."
The firm's services turnover increased by 24 per cent to £50.9m, but its infrastructure business suffered a 34 per cent decline. Byatt said the firm intended to strike a balance between its infrastructure and professional services divisions, to return to profitability.
Last year the firm announced restructuring plans in an attempt to save £5m and 80 jobs were axed. It also cut back hardware stocks and reorganised its management team.
Byatt said: "Obviously the market is dependent on the overall economic climate, and 2001 was a challenging year. However, we look forward to the remainder of this financial year with cautious optimism."
Analysts were positive about the results. Judith Jordan, at Ovum Holway, said: "Morse, like many firms, is having a torrid time, but it is doing the right things to reassure investors that it will be ready when the upturn comes."
She added that Morse was aiming for a 50/50 split between its services and infrastructure business. "It has some way to go, but with £60m in hand, a few well-targeted acquisitions could help Morse reach its goal sooner rather than later," she said.
Morse, which has subsidiaries in France and Germany and recently made an acquisition in Spain, intends to increase its European presence still further, Byatt said.
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