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By | Paul Kunert 2nd May 2013 14:05

Enterprise IT buyers' wallets still glued shut, says reseller giant

Insight in sales misery horror... and it's not alone

Insight Enterprises bigwig Ken Lamneck has wiped out any sales growth hopes for 2013 on the back of a sluggish spending outlook from big ticket customers in the States.

The chief exec made the forecast last night as Insight rolled out final Q1 numbers which were as bad as the company had warned nearly a fortnight ago in its prelims.

"We're currently expecting net sales for the full year 2013 will decline slightly from 2012 due primarily to lower spending by large enterprise clients in North America," said Lamneck.

There were some meaty deals last year that will not be replicated this, the exec added, and pointed to the results from the world's largest distributors as an indication that all is not well in the market.

This view was shaped by a challenging start to the year for Insight - it revealed Q1 turnover dropped five per cent on the same period a year ago to $1.2bn.

Operating profit dived 44 per cent to $14.4m, lower than the $17m Insight management estimated in the prelims nearly a fortnight ago, but this hadn't included a $2.7m severance and restructuring charge.

Group net earnings fell 48 per cent to $9.07m compared to the $17.4m banked in the opening three months of 2012. Selling, general & admin costs decreased two per cent to $141m.

Lamneck said it encountered "additional weakness in demand for IT products by large enterprise clients in North America, which is partially offset by strong top line growth in our EMEA and Asia Pacific segments".

The gross margin fell 30 basis point to 13.4 per cent due to "changes in business and client sales mix [in EMEA]…and partner programme changes".

Turnover in North America slipped 12 per cent to $747m as hardware, software and services declined 12, 17 and one per cent respectively. Some clients froze capital budgets, said the CEO.

Operating income across the Atlantic dropped 42 per cent to $12.2m.

Closer to home in EMEA, sales jumped 11 per cent to $387m but earnings from operations collapsed 72 per cent to $1.18m.

Hardware sales fell four per cent in the region led by "slower demand" for PCs and printers in the mid-market but software and services bounced 22 and 32 per cent.

The relatively small operation in Asia Pacific grew revenues 22 per cent to $47.7m and operating profit more than tripled to $964,000.

Lamneck said he expects Q2 results to "exhibit similar year-to-year trends" as Q1 but sees profit improving later in the year as Insight "realises the benefits of our sales and cost control initiatives".

Insight EMEA president Stuart Fenton last week resigned, as revealed first by The Channel, and is in the process of helping to find his successor.

Lamneck was asked by analysts on the Q1 conference call last night if Fenton's departure was related to weak numbers in EMEA.

"Stuart has been here for 10 years and you know, we've had lots of conversations, certainly it wasn't something that was a reaction to the quarter by any means," he replied. ®

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