Westcon-Comstor’s EMEA distribution sector has been significantly damaged by an SAP roll out. This warning came after an original suggestion in April that the earnings per share that would be delivered during fiscal 2017 were likely to fall by more than half.
Today, Datatec have left investors reeling from the idea that they could be losing about 66% of their profits in comparison with last year. The announcement led to a drop of around 7% in Datatec’s shares, which is to be expected with such a large blow.
Where’s the Blame?
As always when finances are involved, there’s always someone who has to take the blame. In this particular case, Datatec claimed that its distribution arm, Westcon, otherwise known as Westcon-Comstor, was responsible for the fall in sales.
A range of other names, including Synnex, Arrow, and ALSO, have been linked back to Weston-Comstor in recent weeks, however, sources reveal that the damaging impact of the SAP rollout is likely to devalue the entire business in the eyes of investors and potential buyers – at least for now.
Overall, the global sales for Westcon-Comstor have fallen by 7%, to approximately $4.53 billion, with most of the damage being done in the EMEA, where sales began to tumble by $263 million. That’s a gigantic 30% slump in profits.
Things Don’t Look Good
During November 2016, Europe went live with their SAP roll-outs, which prompted a range of transitional challenges, on top of delayed financial reporting. These problems were then further compounded by the outsourcing of business processing for the region.
In MEA, the trading conditions have been seriously weak, according to Datatec, which lead to a pretty poor performance throughout the entire region.
The other main arm for Datatec, Integrator Logicalis, have managed to perform just about in accordance with their expectations for this financial year. Up until now, Datatec hasn’t been able to give any further information about their sale of Westcon-Comstor.
Though the brand has repeated the fact that there’s no certainty that the transaction they’re negotiating will actually be completed, it seems fair to suggest that Datatec is probably going to want to get rid of Westcon as quickly as possible after this.
