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DiData waves profit warning flag

What took it so long?

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The only question is: what took it so long? Dimension Data, the giant networking equipment reseller, issued a profit warning today, citing tough market conditions in the US, the UK and Germany - where it is "predominantly product-led".

The company says it will speed up the transition from being a mostly product reseller, to becoming a mostly services-led business. The acquisition of Proxicom, the loss-making US networking consultancy snatched earlier this year from the jaws of Compaq, is cited as a key component of this strategy, which is expected to feed through into company's results in the next financial year.

Dimension Data is one of the world's biggest Cisco resellers. When Cisco's sales are falling so precipitously - and other networking equipment vendors too - how could DiData be immune? The channel is awash with almost new networking kit - released at rock-bottom prices through liquidation sales of bust ISPs and CLECs. There is still some inventory overhang - and there is next to no new business. It may take another two or three years before networking equipment sales recover to their 2000 levels.

It's never been a better time to be an active buyer - buy new, buy cheap and drive down those ludicrous maintenance charges. And while you're at it, negotiate hard on the consultancy fees as well. ®

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