Insight UK axes top brass

Giant blames decision on 'disappointing' Q2 results

Online reseller giant Insight is blaming its UK division for what it calls "disappointing second-quarter results", despite reporting a turnover of almost $200m more than it posted in the second quarter last year.

As a result, David Palk and Steve Menzies, chief executive and chief operating officer at Insight UK, were asked to leave.

Palk joined Insight last year after it merged with rival VAR Action, a deal which made it the UK's fifth largest reseller.

Last week, Insight posted a second-quarter turnover of $737m, compared with $505m for the same quarter the previous year. It claimed the UK operation let the side down with a turnover of $89m rather than the expected $113m.

Stanley Laybourne, the firm's chief financial officer, said: "The disappointing Q2 2002 figures are due solely to the results posted by Insight UK. Operating expenses should have been further reduced to allow for operating profit, but this was not done."

A team of senior US management is on-site conducting an analysis of the UK business before implementing "a corrective action plan", Laybourne said. He added that the firm is reviewing structure and staffing levels in the UK.

Insight's share price has also taken a tumble, with earnings per share at 28 cents, compared with previous expectations of between 31 cents and 35 cents.

Industry watchers said this fall could cause investors concern because the effects of the Enron and WorldCom scandals are still being felt.

Alan Norton, head of intelligence at credit management firm Graydon, said: "Investor confidence is low. Many do not believe figures released to the market. This is largely because of accounting irregularities connected with Enron and WorldCom. "Insight's results are lower than expected, which appears to have caused investors to panic."

However, Laybourne denied there was cause for concern, claiming there was no reason to believe that figures for Insight UK for Q1 2001 and Q1 2002 had been misstated.

"This unwarranted concern is due to the publicity surrounding other companies' accounting issues," he said.