Feeds

Systemax CEO: Can't get consumer biz out of the crapper

Reports frazzled financials despite B2B arm bringing home bacon

Beginner's guide to SSL certificates

It is a new calendar and financial year for shape-shifting box-shuffler Systemax but the same problem remains: it is hamstrung by a "weak" consumer division that is a burden on the relatively fit B2B operation.

The New York-listed reseller last night reported Q1 results ended March with sales declining one per cent to $873.4m, as healthy gains in the commercial arm were countered by collapsing retail turnover.

The Technology Products business in EMEA and North America climbed 9.8 per cent and 1.6 per cent respectively to $323m and $195.4m, while Industrial Products went up 22 per cent to $129.1m.

But after three consecutive years of declining revenues in Systemax's consumer operation, 2014 got off on the wrong foot as sales decreased 22 per cent to $225.9m.

"Our North American consumer technology performance remains weak," said CEO Richard Leeds in a conference call with analysts.

He said retail PC shipments were "generally stronger" than CE products, but conceded "additional improvement" is required and execs "remain disciplined in the management of this business" to regain profitability.

On the enterprise side of the house, Systemax said larger markets "continue to perform well" but output was more mixed in smaller countries.

In Europe, where the firm trades as Misco, it has shifted all but sales and marketing functions to a Shared Service centre in central Europe and work to build this will continue for another year, the company confirmed.

"We still have work ahead of us, but we see that the fruits of our labours are paying off there," said the CEO.

Not every customer will agree. The outfit is trying to rely less on hardware and software reselling by building an IT services practice but it seems to be aiming at the commodity end of the market.

Leeds finally confirmed last night what El Chan told readers some months ago, that Systemax has swallowed former Cisco Gold partner Phoenix IT Group's network ops centre and its staff.

"In a continued effort to enhance our strategic position within EMEA, we’ve recently added a team of high level Cisco certified engineers, sales experts, and technical support personnel in the U.K".

Leeds added, "We’re just going to emphasise more of our efforts on B2B and try to continue to fix and get the consumer business to be profitable".

Bottom line goodness was something that evaded Systemax in Q1 but the business is finally headed in the right direction: gross and operating margins hardened but a rise in overheads and special charges related to restructuring European ops wiped out profits.

Operating losses came in at $1.3m versus $8.7m a year ago and after interest repayments and the tax man took a cut, net losses were $3m, significantly down from $6.3m.

Working capital crossed the Q1 finishing line at at over $345m, and cash and cash equivalents were $160m. ®

The next step in data security

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.