Over a third of all UK computer hardware companies must undergo some form of restructuring to avoid serious problems or even liquidation.
Size is no protection, according to a pessimistic report from market research firm Plimsoll. Its survey of financial results from 2,471 computer hardware companies reveals that 42 per cent with turnovers in excess of #26 million are financially weak.
Despite these problems, hardware firms increased sales by 15.2 per cent on average in 1996. This was sharply split between large and small companies.
Organisations with a turnover in excess of #26 million achieved growth of 19.1 per cent, while those with sales of less than #3 million grew by only 10.1 per cent.
The picture for profits was similar, with the largest firm achieving a 3.5 per cent pre-tax profit margin against 2.55 per cent for smaller companies. There are some big-time winners, with two per cent of companies posting pre-tax profits of over 20 per cent.
But a contrasting survey published this week predicts boom time for the channel. International Data Corporation (IDC) sees a positive outlook for Europe?s top channel players. It also sees a growing market as the big IT vendors turn increasingly to the channel for help in penetrating the SME market.
The report concedes that lower margins on IT products will see more consolidation in the market. But the report claims that effective moves to service provision can more than offset this loss.
Resellers will enjoy strong growth on the back of increased support for business exploitation of new technologies, and targeting smaller European firms.
The IDC report breaks down gross margins country by country, which reveals that the UK comes out top for wholesalers with 11 per cent, and second place goes to Spain for corporate resellers with margins of 14 per cent. For systems integrators, margins rocket up to 46 per cent for UK companies.
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