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Morse hit by slow server sales in 2001

IBM up, HP and Sun down

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Poor sales of servers at Hewlett-Packard Co and Sun Microsystems Inc caused Morse Group Plc, Europe's largest server reseller, to report a large drop in revenue in the second half of 2001.

In the six months to December 31, the Brentford, UK-based company made a net loss of £6.1m ($8.7m) compared to a gain of £8.3m ($11.8m) in the year-ago period. Revenue fell 26.6% to £226m ($320.9m), which was largely due to a 34.4% drop in its hardware reselling business to £175.1m ($248.6m). Revenue from sales of HP and Sun servers fell by 39% and 44% respectively during the period.

There were two bright points for Morse. The IBM server reselling operation that it set up in 1999 increased revenue by 69% during the half year, and its professional services division, which now accounts for 22.5% of total revenue, grew sales by 23.8% to £50.9m ($72.3m). It said it was winning IBM server market share from rival resellers.

Richard Lapthorne, chairman, said that business volumes have been "stable" since December, and that the company has started to see some new project activity from its clients. He said: "It is clearly too soon to forecast a recovery in the sector, and we view the remainder of our financial year with cautious optimism."

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