Original URL: https://www.theregister.co.uk/2002/11/22/didata_says_market_has_stabilised/

Didata says market has stabilised

Not getting better though

By ComputerWire

Posted in The Channel, 22nd November 2002 17:18 GMT

Network services giant Dimension Data Holdings Plc has posted a net loss after exceptional items and goodwill amortization of $2.58bn for the 12 months to September 20, from $1.72bn the previous year, on revenue that fell 11% to $2.19bn. The Johannesburg, South Africa-based company said that global demand had stabilized during the second half of its latest financial year.

The company's bottom line was hit by exceptional charges of $1.9bn relating to goodwill impairment charges from previous acquisitions. However, the company's total operating profit fell 75% to $45.4m as margins of reselling networking products were squeezed tighter.

Geographically, the company's worst performing business was in Africa, where sales fell 31% to $293m and operating profit dropped 70% to $20m. In Asia, Didata's sales were down 26% to $405m and operating profit fell 64% to $17m. Sales from continental Europe were flat at $360m, and revenue from the UK decreased by 20% to $194m. The company's US operation was boosted by the acquisition of consulting company Proxicom in 2001, which led to sales growth of 24% to $504m, although it made an operating loss of $9m during the year.

Didata said that it had been hit by "constrained IT budgets, declining volumes, smaller deal sizes, lengthening lead times and postponement of significant spending decisions" during the year, and executive chairman Jeremy Ord added: "Visibility remains cloudy and very difficult to forecast."

The company said that going forward, it will focus on security services, IP convergence, customer interactive systems and managed network services, particularly in the US where much of its recent business has been low-margin product sales. Annuity revenue accounted for 25.8% of Didata's revenue during the year, compared to 21.2% in 2001. It also said it would use its offshore development centers in India and South Africa to provide low-cost application and network projects to large clients.

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