Insight braces for $10m hit from Microsoft rebate changes

Mega-VAR posts solid 2010 numbers but prepares for reduced profitability next year

Insight Enterprises is expecting upcoming changes to Microsoft's rebate programme to wipe millions of dollars off its bottom line next year.

Annual results released this week reveal that the VAR's global sales in 2010's fourth quarter increased 14 per cent year on year to $1.3bn (£810m). Operational income was up 38 per cent to $37.3m. Full-year revenue grew 16 per cent to $4.8bn, with operating profit more than doubling to $124.1m.

For 2011, Insight expects sales to grow above the mid-single-digit growth rate of the wider IT market. The VAR anticipates revenue to grow more quickly in the year's first half. Insight also stressed that it will splash out on boosting sales headcount and rolling out IT systems integration projects in both North America and EMEA.

But harder times lie further ahead, and the company indicated it is bracing itself for a $5m to $10m hit to its 2012 bottom line from changes to the Microsoft channel incentive programme. Insight indicated it is already taking mitigating steps in preparation for the changes, which are set to take effect later this year.

Insight chief executive Ken Lamneck claimed reinvigorated refresh cycles had boosted his firm's performance in 2010.

"The technology refresh cycle provided a nice tailwind for our business in 2010, and I believe our team executed very well to ensure we participated in the market recovery and even grew our share in certain categories," he explained. "As I look back on my first year as CEO of Insight, I am proud of the team that we have built and the progress we have made to position our company for the future."

Q4 2010 sales in North America were up 17 per cent annually to $915.16m, with Asia Pacific revenue growing 25 per cent to $57.8m. But EMEA's constant currency top-line growth of 11 per cent was scaled back to just four per cent in dollar terms. Quarterly sales in the region stood at $366.23m.

EMEA hardware sales, which accounted for 29 per cent of the total, declined one per cent annually in Q4. Software revenue, which chipped in 70 per cent of the overall figure, was up six per cent. Services sales, while still accounting for just one per cent of the total, shot up 53 per cent year on year during Q4.