Recession Drags on PC Connection’s Sales

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."