Recession Drags on PC Connection's Sales

By Kathleen A. Martin  |  Print this article Print


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Direct market reseller PC Connection swung to a loss on lower sales as average selling prices dropped. The company reported that unit sales were level year over year for PDAs and notebooks.

Direct market reseller PC Connection, Inc. (NASDAQ: PCCC) announced earnings that continue to reflect sluggish technology sales. Net sales for the three months ended March 31 decreased by 23 percent to $326.2 million from $423.7 million during the same period a year ago. Net loss for the quarter was $1.6 million compared to net income of $4.8 million for the same period last year.

"During the quarter, the overall economy and correspondingly our revenues, declined at a faster pace than anticipated," said Patricia Gallup, chairman and CEO, in a prepared statement issued by the company.

Notebooks and PDA sales, the company's largest product category, decreased by 26 percent year over year and accounted for 15 percent of net sales in the first quarter of 2009 and 2008. Lower average selling prices decreased revenues as unit sales for the quarter were level year over year.

Software sales decreased by 20 percent year over year, accounting for 14 percent of net sales in the first quarter of 2009 compared to 13 percent of net sales for the first quarter of 2008.

Gross profit dollars decreased by $11.1 million, or 21.1 percent, in the first quarter of 2009 from the corresponding period a year ago due to lower revenues. Gross profit margin, as a percentage of net sales, improved year over year by 31 basis-points to 12.8 percent in the first quarter of 2009

Of interest, overall annualized sales productivity decreased by 21 percent in the first quarter of 2009 compared to the first quarter of 2008. This year-over-year decrease echoed through all key segments with a 16-percent decrease in the company's large account segment, a  27-percent decrease in the public sector segment and a 21-percent decrease in the critical SMB segment.

PC Connection reduced headcount of both sales representatives and sales support given the significant decline in revenues experienced in the past quarter.  
Gallup further shared "As previously announced, we took corrective actions in mid-March to align our expense levels with lower sales volumes. Should we continue to see a decline in demand, we are committed to making further cost reductions as needed." 


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