Morse revenue up after restructure

Corporate VAR Morse is building up the barricades to ride out what it describes as a tough year ahead.

Last week the firm released its financial update for the fourth quarter and the year ended 30 June. Profit for the year is expected to hit £9.5m, compared to £7.5m in 2004.

As revealed in CRN earlier this year, the firm has made around 100 redundancies as part of a restructuring move away from infrastructure and towards a consulting, technology and support-based business.

As part of its financial update, Morse announced the sale of its French subsidiary Morse France SAS for £11m. It also said the integration of reseller Diagonal, which it acquired last year (CRN, 8 August 2004), has been “successful”.

Speaking to CRN, Duncan McIntyre, chief executive at Morse, said: “Traditional value-add reselling is dead and we don’t see that changing at all. The market will continue to be tough.

However, because we have restructured quickly, we are ahead of the curve, unlike some of our competitors that have only just started. Morse has had a few tough years recently, but last year we improved revenue and now we can concentrate fully on our profitable model.”

He added that the firm now has a number of vacancies and that there will be no more major redundancies.

McIntyre said the sale of the French subsidiary will allow Morse to focus on other parts of the business.

“We were faced with the choice of effectively doubling our resources in France, or divesting ourselves of it,” he said. He also claimed that the firm is poised for acquisition. “We have cash and are looking to grow the business organically and through acquisition,” he said.

Kate Hanaghan, analyst at Ovum, agreed that Morse has a tough time ahead, despite recent measures.

“McIntyre and his team have got their work cut out. Underlying revenues continue to drift downwards and even without the product-heavy French operation, Morse is still dependent on infrastructure sales for more than half its revenues,” she said.