InTechnology warns of challenging time ahead

Company vows to stay in distribution despite problems over recent months

InTechnology’s chief executive Peter Wilkinson has claimed calmer waters lie ahead of the distributor as it emerges from the choppy seas of the past few months.

Wilkinson is determined to stay in distribution despite the firm posting a restructuring charge of £4m in its latest trading statement, citing pricing pressure in distribution and margin pressure within its security business.

Within the past month the firm has also made redundancies and lost vital business from integrator Integralis to rival distributors.

Wilkinson said: “The distribution side of the business has the challenge of improving efficiencies and everybody in the industry is in the same boat. They are all finding the going difficult at the moment.

“The bigger you are, the more it hurts. We did reduce our headcount by 10 per cent and we have got to get into a situation where we are not permanently looking at cost cutting.”

The distributor, which counts Hewlett-Packard, IBM, Computer Associates and Veritas as some of its major partners, last week announced that its half-year (ending 30 September) earnings would fall below market expectations. The firm’s restructure earlier this year (CRN, 10 May) will result in charges of £4m and operating-cost savings of around £6m, according to the statement.

“We are not going to walk away from distribution. But there is more supply than demand out there,” Wilkinson claimed. On the flip side, he said the firm’s managed services division grew 52 per cent last year.

“We have pumped a lot of money into managed services and that has made us a good profit. From our perspective, £20m of managed services business equals £70m of distribution.”

Alan Norton, head of intelligence at Graydon, said: “InTechnology is a strong company and has a healthy balance sheet. It has a good team that can turn the company around.”

Alastair Edwards, senior analyst at Canalys, added: “InTechnology has lead the way in many senses and recognised the convergence of security and managed storage. We are seeing more of this kind of restructuring in both volume and value distribution and everybody is feeling the pressure.”