Action still talking as profit stumbles

Action Computer Supplies has confirmed it will complete talks with a potential acquisitor within a few weeks, having recently reported bleak interim results.

As exclusively revealed in PC Dealer (24 March), Action has confirmed that talks are under way.

A US company is tipped as the most likely suitor, with Insight Enterprises or Global Directmail the favourites. The restating of the admission of talks came at the same time as poor results for the six months ended 26 February.

Action's profit was down 11.8 per cent to #2.7 million, although sales climbed by 30.3 per cent to #140.9 million. The drop resulted in Action's share dropping to its year low of 199p.

Henry Lewis, chairman of Action, said: 'PC sales and large customer spending continue to be weak and we remain cautious about the effect on our prospects for the full year. Discussions continue and the board will inform shareholders of any developments.'

The company's problems stem from a sudden downturn in PC sales to its larger customers as well as a similar downturn at its SHL and Fraser Associates subsidiaries.

During the period, Action was also hit with a #693,000 charge related to the acquisition of Fraser Associates. Investment in infrastructure was also cited as a drain on the company's resources.