Corporate VAR looks beyond organic growth in attempt to put "difficult year" behind it
Computacenter (CC) has hinted it will be on the acquisition path in 2006 in an attempt to counter its flagging profits.
As revealed by CRN online last week the infrastructure services provider posted turnover of £2.29bn for the year ended 31 December 2005, compared to £2.41bn in 2004. Pre-tax profit dropped by just under 50 per cent to £34m compared to £67.9m the previous year.
The firm, which has over the past year experienced profit warnings, redundancies, a business reorganisation to focus more on services and a failed management buyout (CRN, 19 January) blamed its significant profit decline on “lower vendor rebates in the UK” and admitted that it had experienced a “difficult year”.
Back in 2004, CC was forced to issue a statement to the city warning of a loss of profitability following Hewlett-Packard’s (HP) cut in rebates (CRN, 29 November 2004).
HP defended its decision to cut rebates stating to CRN that it “regularly reviews its businesses and operations to ensure that they offer the best possible customer experience and value.”
Ron Sandler, chairman of CC said in a statement that the firm will be returning cash to shareholders, “subject to retaining sufficient resources in the company to take advantage of opportunities to advance the strategic repositioning of Computacenter through acquisition.”
The statement added that the services division performance was “encouraging” but the CCD distribution division also had a “disappointing year”.
On a more positive note the firm’s recently established Computacenter Direct arm, which targets the medium-sized business sector saw turnover “steadily increase” during 2005, and its services division saw “modest” revenue growth.
Kate Hanaghan, analyst at Ovum said it was essential that CC went for the right type of acquisition.
“They should obviously go for companies in high growth areas rather than plain IT support areas. To go for a series of smaller, low profile acquisitions would make sense rather than one big one.
“If you compare CC with Morse, which has traditionally been very acquisitive, it has always focused more on organic growth. Now acquisition is what CC needs to do,” she said.
Derek Lloyd, managing director of rival PC World Business agreed an acquisitive strategy is the way forward.
“The results have come as no surprise. The idea of getting into mobility, security and all the large infrastructure specialisms to help them develop their services division makes a lot of sense and from my observations, this is what they are trying to do.”
Computacenter (CC) has hinted it will be on the acquisition path in 2006 in an attempt to counter its flagging profits.
As revealed by CRN online last week the infrastructure services provider posted turnover of £2.29bn for the year ended 31 December 2005, compared to £2.41bn in 2004. Pre-tax profit dropped by just under 50 per cent to £34m compared to £67.9m the previous year.
The firm, which has over the past year experienced profit warnings, redundancies, a business reorganisation to focus more on services and a failed management buyout (CRN, 19 January) blamed its significant profit decline on “lower vendor rebates in the UK” and admitted that it had experienced a “difficult year”.
Back in 2004, CC was forced to issue a statement to the city warning of a loss of profitability following Hewlett-Packard’s (HP) cut in rebates (CRN, 29 November 2004).
HP defended its decision to cut rebates stating to CRN that it “regularly reviews its businesses and operations to ensure that they offer the best possible customer experience and value.”
Ron Sandler, chairman of CC said in a statement that the firm will be returning cash to shareholders, “subject to retaining sufficient resources in the company to take advantage of opportunities to advance the strategic repositioning of Computacenter through acquisition.”
The statement added that the services division performance was “encouraging” but the CCD distribution division also had a “disappointing year”.
On a more positive note the firm’s recently established Computacenter Direct arm, which targets the medium-sized business sector saw turnover “steadily increase” during 2005, and its services division saw “modest” revenue growth.
Kate Hanaghan, analyst at Ovum said it was essential that CC went for the right type of acquisition.
“They should obviously go for companies in high growth areas rather than plain IT support areas. To go for a series of smaller, low profile acquisitions would make sense rather than one big one.
“If you compare CC with Morse, which has traditionally been very acquisitive, it has always focused more on organic growth. Now acquisition is what CC needs to do,” she said.
Derek Lloyd, managing director of rival PC World Business agreed an acquisitive strategy is the way forward.
“The results have come as no surprise. The idea of getting into mobility, security and all the large infrastructure specialisms to help them develop their services division makes a lot of sense and from my observations, this is what they are trying to do.”
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