Services push hits Morse

Corporate reseller's bottom and top lines go in opposite directions as services push takes hold

Corporate reseller Morse saw turnover plummet but profits surge for its fiscal 2007, as its de-emphasis on hardware continued to impact both its top and bottom lines.

Rocked by an unexpectedly sharp 31 per cent plunge in infrastructure sales, the London-listed firm saw turnover from continuing operations slide from £296.5m to £256.5m for the year to June 30.

In contrast, Morse’s greater reliance on higher-margin services ensured operating profit from continuing operations leapt 16 per cent to £12.2m.

Following its decision to only sell product as part of a services engagement, Morse now carves its business into three areas: Management Consulting; Applications Consulting; and Infrastructure Consulting.

Management consulting sales rocketed 26per cent to £17.8m, while sales from application consulting slipped a modest 12 per cent to £74.9m.

However, revenues at its infrastructure arm nose-dived by nearly a third to £97.3m, and Morse’s new chief executive Kevin Alcock admitted the drop had been “sharper than anticipated”.

“Moving forward, we will continue to focus on growing our services business, however product delivered as part of the service remains a key part of the offering and we believe that in this regard product revenues are now reaching a level of support from which we can progress,” Alcock stated.

The results come three months after Morse spun off its loss-making subsidiary Monetise (CRN, June 18).