South African networking group Dimension Data dived 10 percent on Thursday after its Datacraft Asia unit warned of a year loss and despite slightly better-than-expected first-half figures from the parent firm.
Didata posted a sharp drop in underlying earnings in the six months ended March and said IT spending remained slow and the outlook for the sector uncertain.
But revenue in the second half was expected to exceed that in the first six months thanks to a mix of services and solution offerings, better sales capabilities and greater awareness of the Didata brand internationally.
”Overall trading conditions in all regions remain competitive and buying cycles are long. Visibility is cloudy and the timing and extent of an upturn in IT spending remains uncertain,” South Africa’s biggest tech group said.
But IT markets seemed to have bottomed, or stabilised by the end of March, it said.
Executive Chairman Jeremy Ord told a conference call with journalists that even though clients in the US were not making a lot of new IT purchases, ”we’re seeing a lot of planning”.
But the results, and Ord’s comments, were overshadowed by Datacraft Asia’s warning of its first year loss since its 1995 listing, which prompted Didata to make a $15-million provision on its income statement.
This sent Didata shares skidding more than 10% lower. But by 0844 GMT they were 7,7% off at 941 cents in Johannesburg. They were 6,9% down in London, underperforming a 0,6% drop in European techs.
Didata said earnings per share before goodwill amortisation and exceptional items fell to 2,0 US cents at March-end 2002 from a restated 8,6 cents in the same period last year. Analysts had expected first half headline EPS of 0,9-1,7 cents.
First half turnover, including that from associates, fell to $1,102 billion from $1,235 billion in the second half of 2001 — mainly due to sharp drops in Asia, Australia and the rand’s slide, which hit African turnover reported in dollars.
”The bottom line is slightly better than expected, but the top line is slightly lower,” said one analyst, who said the operating margin of 3,7% was better than expected, even though it was below second half 2001 levels of 4,8%.
Gross margins fell to 22,4% from 22,6%.
In March, Didata had warned that first half margins would be lower as business tailed expectations in its electronic commerce and call centre units and as competitors slashed prices.
Despite this, Ord said the group had made good progress towards an integrated global approach to business, and this was showing in Didata’s enhanced ability to sign up global customers like HSBC.
More customer wins would be announced in the next few days.
Another plus, he said, was the growth in annuity income as a percentage of overall turnover to 24% — an increase of about a fifth on the second half 2001 level. – Reuters