Focus on IT services paying off for Computacenter

Computacenter yesterday credited a solid performance from its IT services business for offsetting a weak performance from sales of computer hardware, particularly to investment banks and telecoms groups.

Consequently the company, which is based in Herfordshire and employs 5,500 staff, said profits for 2001 would be "broadly in line" with analysts' forecasts of around £52m.

Mike Norris, chief executive, said: "If Computacenter had had that sort of decline [in product sales] three or four years ago, it would have gone into loss. Today, while we're not making heaps of money, we're coming in on the analysts' forecasts which proves a greater resilience."

He put much of that resilience down to the company's services business being no longer solely reliant on product sales now it had many long-term outsourced IT support contracts. Shares in the company closed down 1p at 339p.

Computacenter said yesterday that market conditions were "somewhat worse than were generally predicted" when it published its half-year results in August, resulting in a 28 per cent drop in UK product revenues in the second half from the first half of the year.

In the affected product side of the business, Mr Norris said sales of servers and networking equipment had been hard hit while sales of PCs had not been "as bad". Sales to investment banks and telecoms companies, which account for around a third of sales, had been tough, he said, but noted that sales to government continued to be "very strong".

While the company said it was too early to predict how it would fare in 2002, Mr Norris said he thought the first quarter of the current year would be marginally better than the final quarter of last year.

"I think anybody who's expecting some rebound, whether this month, this quarter or this year, is misguided. I think there will be a slow, gradual return," he said. Nevertheless, Mr Norris described the company's performance as "pretty good". "I'm not trying to sound self-congratulatory ... but given the market conditions, I find it difficult to get hot under the collar about the performance."

Computacenter, which plans to publish its 2001 figures on 13 March, also said the integration of GE Capital Information Technology Services was continuing according to plan.