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Morse shares tumble on channel exposure

Hardware blues

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Shares in UK IT services group Morse took a tumble yesterday, after the company warned that conditions in the hardware reselling business would continue to be tough.

In a sales update the company reported flat revenues of £96m for the quarter (Q3) ending 31 March, and its announcement that it would take "radical action" to reduce its exposure in the low-margin hardware business did nothing to stop shares sliding more than 15 per cent to a new low of 91 pence.

Morse has been trying for some time to drop the reseller tag, and reposition itself as an IT services group (the margins are much healthier). It said that its services business now accounted for 45 per cent of sales, but since its hardware sales are flagging, it is not such a surprise that other parts of its business account for greater proportions of its turnover.

Duncan McIntyre, chief executive said he was disappointed with the performance of the UK infrastructure business this quarter, adding that the market was weaker than expected, the FT reports.

"The IT hardware business has been pointing in this direction for a while but we have now realised we need to take more radical action," he told the newspaper.

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