High time for Time Computers
Poor pre-Xmas sales trigger major overhaul
Falling PC prices and sales, combined with the company's own headlong expansion, have forced Time Computers to change its forecasts and business plans.
The review comes against the backdrop of reports that Time is seeking urgent refinancing talks with its bankers, HSBC.
The Lancashire-based system builder/retailer, well known for its adverts featuring the Star Trek actor Leonard Nimoy, has been heavily expanding it retail activities and it now has 180 stores in the UK employing more than 2000 staff.
But this expansion has left it exposed to falling PC prices and weak demand from consumers in the run up to Christmas. Matters can not have been helped by the fact that Time consistently performs poorly in Which? user satisfaction surveys.
In a statement, Brian Marsden, Time Group's Financial Director, said: "The trading climate in the global PC market is difficult at the moment and we believe that we cannot rely on it improving in the foreseeable future. Therefore, we are undertaking a strategic and operational review of our business to better align it with the current marketplace.
"This will further enhance the investment in our mobile communications business, Time Talk, which has opened over 100 stores in the last ten weeks."
Brian Burke, manager at credit and business analysts Dun and Bradstreet Computernet, said Time had effectively had to throw its "forecasts and plans out the window" because the run up to Christmas had not brought in the dividends it expected. It was now too late to make up for lost ground, he added.
He said that the PC market was generally depressed and difficult and that it therefore made sense for Time to put emphasis on its mobile phone business. Burke added that the review of Time's business could result in up to half its stores been renamed as Time Talk, rather than Time Computers, though it was almost certain the Time name would stay.
According to Burke, talk with HSBC are likely to be about plugging a short term gap in the operation's cash flow rather than anything more serious.
Sunday Business quoted a source "close to the discussions" with HSBC who describes Time's status as a "blip rather than a going concern issue". The company needed short-term support to get it through a difficult climate, the source said.
Problems in sales in the run up the Christmas are not confined to Time. Last week, shares in PC manufacturers fell after Gateway issued a profit warning that said the usual festive surge in computer sales has failed to materialise. ®