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Computacenter has issued a profit warning due to slower than expected recovery from Y2K.

The UK's biggest reseller said profits were in line with the company's expectations in the first quarter, but "we are seeing a shortfall relative to budget in Q2".

It anticipates "the delayed recovery will affect Q3, albeit to a lesser extent".

The group, which earlier this month made a hostile bid for rival UK reseller Compel, said today it expected to remain "strongly in profit". But it warns that its results for the full financial year look likely to fall below current analysts' forecasts.

"With the growth of e-commerce, the IT challenges facing our corporate customers have changed substantially since 1999. One consequence is that it is taking them longer than we anticipated to bring new projects on stream post-millennium," Computacenter said in a statement.

It also blamed delayed widespread use of the Windows 2000 operating system which it said was not expected to gain momentum until the latter part of the year. "This is having the effect of slowing down new IT infrastructure roll-outs at the present time," it said.

However, the company remains upbeat for the future - it is starting to see the first big W2K implementations, and its Sun Microsystems business is blooming on the back of accelerated demand for e-commerce applications.

Computacenter forecasts profit before tax for the year July 1999 to June 2000 to top £55 million.

"In the medium and longer term we remain extremely confident about the outlook for the group," it says. "Our strategy of continued investment in developing the range and scale of our service businesses remains unchanged and on track." ®

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