UK hardware industry faces testing times
A quarter of the biggest businesses in computer hardware could disappear, be taken over or be forced to change radically to survive through 2001, according to a recent study.
A quarter of the biggest businesses in computer hardware could disappear, be taken over or be forced to change radically to survive through 2001, according to a recent study.
The annual report on the UK hardware industry, First Edition 2001 Plimsoll Portfolio Analysis: Computer Hardware, was published by analyst Plimsoll.
The report describes four types of company strategy. 'Winners' have an average debt of 1.8 as a percentage of sales coupled with high sales growth. 'Chancers' have high borrowings of 16.7 per cent of sales, but also high sales growth.
'Sleepers' have low borrowings and low sales growth, while 'Losers' have an average debt of 19.7 per cent and have average sales growth of 10.6 per cent. Of the 1095 companies profiled, 295 fall into this final category.
David Pattison, manager at Plimsoll, said: "We wrote this analysis to bring this discrepancy to the attention of the industry. We shatter a lot of illusions."
Although they profiled only a limited number of companies, Plimsoll analysts spoke with more than 2000 to weed out the smaller firms. They found that levels of debt had nothing to do with company size.
"There is nothing wrong with debt," explained Pattison. "When debt is financing losses with no demonstrable gains for the company, that's bad. We're not accountants, so we're a little more optimistic. We are just looking at the numbers."
Pattison admitted that not all companies would be happy with their assigned categories. The terms "are all a little bit derogatory, even though they're meant to be thought-provoking", he said.
Plimsoll based its report on companies' audited accounts. The data was gathered within one month of publication through the Registrar of Companies.
According to Pattison, those using Plimsoll's analysis tend to be people in the industry assessing the competition.
First published in Computer Reseller News