Morse warns confidence remains low

Corporate VAR says client confidence reflects economic uncertainty

Corporate VAR Morse has warned that customer confidence is still weak, after releasing its sales performance update report.

Morse predicted turnover for the first quarter of its financial year ended 30 September would be £93m, down from £111m for the same period last year.

Services turnover increased from £23m last year to £25m, while infrastructure turnover decreased to £68m, compared with £88m in 2001.

Client confidence continues to reflect general economic uncertainty, and until it improves sales forecasting will remain difficult, the firm said.

"We are now doing our quarterly results, and they are broadly in line with expectations, with infrastructure turnover dropping and services increasing," said Mark Byatt, marketing director at Morse. "Until economic conditions improve it will be tough."

He added that the company still has a strong cash position, with a balance of £73m.

The company indicated in its preliminary year-end results in August (CRN, 9 September) that the new financial year would be weaker than last year.

Clive Longbottom, service director at analyst Quocirca, agreed that there is a lack of customer confidence and said that the market is "bumping along the bottom".

He said: "There could be a bit of a pick-up in January with another in April, but they will not be sustained. There are particular problems in the hardware market, where Morse plays, because customers are trying to maximise existing investments."

In contrast, Gordon Davies, commercial director at reseller Compusys, said he expected his firm's turnover for the next year to rise by 20 per cent.

A slump gives the channel the chance to offer customers real savings, he said. "We have some hot spots that are growing rapidly, including the SME and public sectors," he said.