Exchange rate fluctuation hits Cisco partners

VARs' margins subject to change as dollar "bounces around like nobody's business"

Dollar distress: partners claim the unpredictable exchange rate has made it "very difficult to get deals through"

Cisco and its distributors have been urged to help out VARs facing a margin headache from fluctuating exchange rates.

One partner lamented Cisco’s policy of pricing in US dollars, adding that rivals including Dell, HP and IBM gave prices in sterling.

The partner claimed the oscillating exchange rate, coupled with Cisco’s recent lead-time problems, has imperilled margins and a change of two just cents is problematic “when you are only making 10 per cent”.

“The dollar has been bouncing around like nobody’s business and it is very difficult to get deals through,” said the partner.

Gary Dobson, sales director at VAR Dynamic Technologies Europe, said: “You may have put five per cent on a £100,000 order and, lo and behold, the dollar rate comes back and you get hammered. But we all know we are tied to the dollar; no one was complaining when it was two dollars to the pound.”

Dobson encouraged distributors to help out, singling out Comstor for praise after a recent six-figure order.

“To protect the deal, as soon as we placed the order they went out and bought the dollars in at the rate on the day,” he explained.

Scott Nursten, managing director of Gold partner s2s, also claimed that currency fluctuations were a double-edged sword.

“Having a pound price set weekly would be preferable, but it is swings and roundabouts – there are times when you win,” he said.

He added that each distributor “got it right” at different times.

“One may be hedged against (fluctuations) and their rate will be different to the others,” he said. “We have seen benefits from Comstor and Ingram Micro.”

Cisco declined to comment at the time of going to press.