Bell Microproducts' cash injection into Europe last year seems to have paid off. The region accounted for almost half of the distributor's overall turnover in the fourth quarter of 2003.
Bell, parent company of Ideal, said last October it was injecting $25m into its European business. As a result, mostly thanks to its software business, Europe contributed 49 per cent of the firm's turnover in Q4 2003, with the US making up 40 per cent.
Globally, Bell reported turnover of $640m for Q4 2003, up 15 per cent on Q3. Net profit for the quarter was $2.4m, twice that of Q4 2002. For the year the distributor reported turnover of $2.2bn, up six per cent on 2003, while the firm made a loss of $4.5m, compared with a $7.1 m loss in 2002.
Bell's software business was its fastest-growing segment, reporting a 35 per cent increase on Q3. The firm said its Licence Desk on the Internet (LDi) tool performed particularly well.
Ideal, which launched LDi in the UK two years ago, last week said it has upgraded LDi to make it easier and faster for resellers to clear licensing for customers.
Greg Finnigan, software sales and marketing manager at Ideal, said: "We already have the agreement for a live look-up tool, but we are going to introduce postcode scanning, duplicate purchase order checks and language fields for Microsoft's key supported languages. We want to make selling licences as easy for resellers as selling a PC."
But Gordon Davis, commercial director at reseller Compusys, said: "This is a 'loss leader' business for distributors. There isn't much value there for these guys to add, or much margin.
"A lot of integrators go on price and credit now, and distributors go in cycles of popularity. Channel loyalty to distributors can be written on the back of a postcard."
But Finnigan said LDi had helped Ideal trim costs. "Distributors are on single-point margins on volume Microsoft software licensing," he said.
"The best path for us is to strip costs out. Margins are unlikely to get better.
"This year is going to be pivotal for software's route to market. We will see indications of how Microsoft is going to move to a model that's more about increased control and lower cost of licences."
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