Changing Elonex reports profit

UK PC vendor Elonex remained profitable, despite a much-publicised switch in manufacturing policy, in its last fiscal year. The London-based direct seller said it made £3.38 million before tax on revenues of £101.49 million, compared to a £4.66 million pre-tax profit on revenues of £109.84 million for 1994/95.

Elonex has never made an operating loss since it started in 1986 and financial director Michael Spiro said he was "very satisfied" with the results in the teeth of a "turbulent year" in the overall industry.

Elonex's year was marked by the closing of the Cumbernauld, Scotland systems assembly facility. "The factory had its use at the time but we stopped the assembly as we had trouble getting total control of quality," Spiro said. "We bit the bullet and said 'enough is enough'. We still manufacture our own boards and assemble in London but also we use Intel and other industry standard boards. It's very much a case of changing times What we needed then is not needed now."

Spiro said revenues would continue to increase from Elonex's recent venture into shrink-wrapped software and from patent licensing. The firm recently released the first products of a line of packages that use the Internet for remote communications, and agreed a licensing agreement with Hewlett-Packard. "I hope and expect [the new businesses] to contribute a fair amount. We expect them to provide at least seven-digit revenues this year," Spiro said.

In the long-term, the plan is for Elonex to become known as an overall soup-to-nuts supplier and partner with other system integrators on big contracts. "We want to be more a complete solution provider to customers, beginning with consulting and ending in training. We don't mind the ones and twos PC sales but we don't want to bend over backwards to attract first-time home buyers. I'd like to increase high-end services and put more focus on generating a viable business there, where the margins are higher. It's like with cars: I can fix my car myself, get a garage to do it or get an authorised garage to do it. We want to become a smaller version of EDS, partnering with others where there is massive volume business."

PCDN COMMENT:

Elonex continues to be one of the most powerful players in UK computing. These figures look ordinary compared to the stunning figures Elonex was regularly turning in a few years ago but it would be brave - or foolish - to bet against Israel Wetrin's company successfully reinventing itself.