Northamber has become the latest victim of spiralling PC prices afterafter profit warning. issuing a profit warning, sending its shares into a tailspin and lopping off more than a third of their value.
The share price initially fell by 31 per cent to 89p, following the distributor's disclosure on 1 June that second-half pre-tax profit to 30 June would be 'significantly below market expectations'.
The price closed that day at 97.5p - the lowest closing price of the year so far and 24 per cent down on the 129p at which it was valued before the announcement.
According to the trading statement issued by Northamber, the distributor had been hit by 'the recent trend of falling unit prices, driven by over-supply.' The warning is particularly significant because the profit shortfall will occur during what is traditionally Northamber's most profitable period.
Investec Henderson Crosthwaite Securities, Northamber's broker, has consequently revised previous pre-tax profit forecasts for the year end from £9.8 million to £6 million, but was unavailable for further comment.
On the day of the announcement, Northamber repurchased 25,000 of its own ordinary shares at 102p per share - 0.07 per cent of the company's issued share capital.
In the first six months ended 31 December 1998, Northamber had a pre-tax profit of £4.4 million, which was down slightly from the previous period following an exceptional charge related to a property write-down.
At the time the results were released, David Phillips, chairman of Northamber, predicted that the then imminent launch of Pentium III machines would 'create further growth' (PC Dealer, 10 February). However, prices of these higher end PCs have fallen fast enough to adversely affect the price points of several vendors and distributors.
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