Update: Computerland UK issues profit warning

Blamed on falling product sales

Computerland UK has pumped out a profit warning, after seeing its product sales fall unexpectedly in December and January. The Nottingham-based company says it expects sales to continue at this new lower level for the rest of the financial year, ending 30 April 1999. This means results will be "materially below market expectations". Computerland UK’s share price fell 60p to 100p on the news. According to the Evening Standard, analysts have slashed 1998 profits forecasts from £1.7 million to £1 million. The Evening Standard says the problem lies in sales of "prepackaged software" -- in other words Microsoft licences -- which are likely to be down 15 per cent in the second half. In an interview with the paper, Graham Gilbert, chief executive, said restructuring would take "months, not years". Computerland says it wants to be a one-stop shop for its corporate customers. This means less emphasis on price-driven, low-margin product-only sales However, product sales slumped, before the fruits of the one-stop shop strategy came through. Computerland UK is a classic corporate reseller – the company flogs value-added services to UK companies on the back of tin shifting – in much the same fashion as a Computacenter . Only it is a fortieth of the size of the European market leader The company make the majority of its profits from networking, installation and maintenance. It has also invested heavily in a remote support centre – which may make money one day. ®

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