UK hardware distributor hit by downturn

Computacenter has warned the stock market that despite a big increase in profits in the first half of the year, things might not be so rosy in the months ahead

IT hardware reseller Computacenter saw its share price drop sharply on Wednesday morning amid fears that it might perform badly in the second half of 2001.

Releasing its interim results the company announced that although profits for the first half of this year had met market expectations, it was concerned about the second half. "Trading conditions, and therefore the outlook for profits, in the second half of 2001 are difficult to predict with confidence," it said in a statement.

Shares in Computacenter dropped by as much as 30.5 pence to 218.5p before recovering to 228p in the afternoon, down almost 10 percent compared to Tuesday's closing price.

Computacenter's warning shows how much uncertainty there is in the market as to when the tech slump will end. Figures released last week by research group Gartner revealed that sales of PCs in Western Europe fell in the second quarter of this year, for the first time ever. Computacenter sells kit made by companies such as Compaq and Sun Microsystems, as well as supplying IT services to large firms.

Chief executive Mike Norris has admitted that while Computacenter performed very well in the first quarter of this year, it did less well in Q2. It achieved pre-tax profits of £34m in the first half of the year -- an increase of 60 percent compared to the year before.

US computer manufacturer Gateway announced last week that it was in talks with employees to close its factory in Ireland, blaming a decline in sales. Computacenter, which employs 4,600 staff in the UK, is confident that it will not need to cut jobs.

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