Computacenter cautious over upturn in PC sales

Hopes that the PC market would come back into vogue this year, fuelled by the launch of Microsoft's XP operating system, were dashed yesterday after Computacenter sounded a cautious note on trading.

The Hertfordshire-based provider of information technology hardware and services blamed "subdued" markets for its caution and said making any forecast for the year was too difficult. "Certain sectors are hurting us particularly badly. Telecoms and investment banking are the obvious two," said Mike Norris, the chief executive. "At the end of the day, it doesn't matter what operating systems appear. If you've got organisations making huge amounts of redundancies, they're not going to go and spend a lot on IT," he said.

About 35 per cent of the company's sales come from the telecoms and investment banking sectors, areas which have both endured thousands of job losses around the world over the past year.

Computacenter yesterday published a 2001 pre-tax profit, before exceptional items, of £51.1m, in line with guidance given in January, but down from the £55.6m it achieved a year earlier. Sales were up 5 per cent at £2.09bn.

Weakness in sales of products during the year was partially offset by an 18 per cent rise in sales from IT services, an area Computacenter has been keen to strengthen.

The company, which last month confirmed it was talking to BT about a potential IT services partnership, said it hoped to get a contract signed this month. The deal, worth an estimated £150m over five years, will see Computacenter take on about 380 BT staff and look after the firm's desktop PC network.

Mr Norris was reluctant to predict when trading conditions might improve but said he "doubted" things would get any worse and thought there might be a "gradual upturn" rather than a sudden return to growth.

"I think there'll be a gradual upturn but quite when I don't really know," he said.

Computacenter, which exited its loss-making German operation last year, said its French division had its best year, recording £262.5m of sales, up 22.4 per cent, and a £6m operating profit, up from £1.7m a year before.

Mr Norris said the company, which finished the year with about £53m of cash, would consider buying up "distressed assets". Shares in the company closed down 4 per cent, or 14.5p, at 342p.