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Sales down at Black Box

Across the board

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Black Box Corporation, the hyper-acquisitive networking equipment reseller, saw a big sales fall in the three months ended June 29, 2003, its Q1.

Group revenues were $128m, down 17 per cent from $154m last year. North American sales were $86m, down 20 per cent from last year's $36m. All other revenues were $8m, down 20 per cent from last year's $10m. Because Black Box buys so many companies, it would have been instructive for the reseller, to provide like-for-like sales, in the way that retailers do to strip out the effect of new store openings.

Net income for the quarter was $11.5m, 9 per cent of revenues, against $14.7m or 9.5 per cent of revenues last year. This remains a healthy margin for what is a dealership mostly selling commodity products and services and it shows the company has a strong grip on cost containment.

During the quarter, the company produced free cash flow of $16m. Here is what the money was used for: stock repurchases of $14 million; dividend payments of $1 million; and merger activity of $1 million. The Black Box also used $5 million of cash on hand for additional stock repurchases during the quarter.

Is it wise to buying back shares? If the company has excess capital it would be doing its stockholders a favour by distributing the cash by way of dividend. ®

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