Northamber pins price erosion on Intel

Turnover is vanity, profit is reality, cash is sanity

Northamber has placed the blame for market price erosion squarely on Intel’s shoulders. Turning in a good set of annual results, the Chessington-based distributor said “over-frequent announcements of performance upgrades to their Pentium processors... had contributed to purchasing delays and inevitably consumer confusion”. Sales were also adversely affected by the withdrawal by AST from the PC desktop market, the company said. Northamber was at one time Europe’s biggest distributor of AST hardware. Against a background of “the hesitant conditions prevailing in the general marketplace”, Northamber produced sales up 6.8 per cent to £293.46 million for the 12 months to June 30, 1998 (£314 million for the 14 months to June end, 1997). More importantly, the company reported £8.81 million PBT for the year to June 30,1998, against £7.92 million for the 14 months in the previous financial year. Profits were up 30 per cent for the corresponding 12 month period. It ended the year with net cash of £1.7 million, against borrowings of £1.7 million last time. Pre-tax margin increased to 3.0 per cent up from 2.5 per cent last time around, helped along by the channel assembly and late configuration, according to chairman David Phillips. He said the company improved profits because it “avoided the vanity of revenue. We will not chase market share for the sake of it, unlike some of our competitors who end up wrapping money around each box they send out”. Margin retention would remain the key focus of the board, he said. Northamber, linked with bid speculation since last November (when it was first linked with CHS Electronics, the acquisitive US-owned distributor), could be interested in making an acquisition, he said, while noting the scarcity of targets. “If a distributor has a clean balance sheet and a clean business, we could be interested, but there is very little about,” he said. “There are a few big companies, many small companies and nothing left in the middle.”. ®

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