Feeds

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

Reports frazzled financials despite B2B arm bringing home bacon

Providing a secure and efficient Helpdesk

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. ®

Beginner's guide to SSL certificates

More from The Register

next story
Scrapping the Human Rights Act: What about privacy and freedom of expression?
Justice minister's attack to destroy ability to challenge state
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Hey Brit taxpayers. You just spent £4m on Central London ‘innovation playground’
Catapult me a Mojito, I feel an Digital Innovation coming on
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
EU probes Google’s Android omerta again: Talk now, or else
Spill those Android secrets, or we’ll fine you
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.