Computacenter suffers dramatic slump in profit
Corporate VAR looks at market approach as Dell's success affects financial performance
Computacenter (CC) is readdressing its approach to the market, after the corporate VAR reported a drop in pre-tax profit of 73 per. cent to £8.2m, from £30.1m last year, for the six months to 30 June.
Tony Conophy, group finance director at CC, told CRN: "The success of Dell in the desktop and laptop space has had an impact and put pressure on us. We're addressing how we approach the market and addressing how we can become more efficient."
Conophy said the revamp of the product business (CRN 11 July) had been implemented, and that "market expectations for the rest of the year are steady" .
"The correct direction for our business is to focus on future growth in the higher-margin services business but also focus on developing the product side of CC. The structural changes we announced in the summer address this," added Conophy.
CC put the drop in first-half profit down to a steep fall in product margins, but said its Managed Services business continued to make progress, with revenue growth of 1.3 per cent and a number of "significant new contracts secured".
George O'Connor, technology analyst at Shore Capital, said: "CC needs to manage the longer decline in reselling as channel disintermediation will continue to dog the sector.
"There is risk that CC could clash with Hewlett-Packard. The latest from HP is that it will favour resellers with high ‘attach rates’, a move which works against high-end resellers that offer users choice.
"A lot of CC's product revenue is still tied to HP, however this is declining. As CC's role shifts to infrastructure advisor and service provider, its product portfolio will change, but so too will the relationship with HP."