Microage is set to delay its plans to expand in Europe after the Var and distributor made a disappointing $5.4 million quarterly loss because it misjudged inventory.
Microage chairman and chief executive Jeffrey McKeever said the company will concentrate on sales for the next quarter and lay off an undisclosed number of staff, restructuring the company, rather than pressing ahead with expansion plans.
For the company?s first quarter to 1 February, Microage lost $5.4 million, compared to a $5 million profit in Q1 last year, on turnover of $1.2 billion, up 31 per cent over the same period.
McKeever admitted Microage made ?a serious strategic mistake? by not joining vendor buy-in programmes, in a bid to cut inventory. When it eventually needed products, channel assembly schemes were not ready and dealers had begun buying from other distributors, leaving Microage with expensive excess inventory.
?Our financial results were adversely impacted due to lower than anticipated sales, pricing pressures and reduced rebates,? he said. The result of the restructuring may mean Microage will split into two distinct companies, one for distribution and one for integration, McKeever admitted.
McKeever said acquisitions by Microage?s integration unit led to a 36 per cent fall in its turnover, which contributed a quarter of the loss.
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