* Expects cost to service new contracts to be 7 mln stg more
* Sees 3 mln stg impact to profit from euro weakness
* Shares fall as much as 20 pct
June 14 Computacenter Plc is expected to
take a hit on its bottomline as the IT company anticipates
investment to service new contracts will now cost more than
In April, the company, which provides IT infrastructure
services and also advises customers on IT strategy, had alluded
to the costs saying that given the size and number of large
contracts won, it would incur margin-squeezing costs to bring
the business on board.
Computacenter had expected these costs to continue to
squeeze margins in the short term.
However, the company now expects these costs to amount to an
additional 7 million pounds this year, or about 10 percent of
the adjusted pretax profit the company posted last year.
Computacenter said the additional costs include hiring over
700 new services personnel as well as costs related to sales
The company also expressed concerns about a weaker euro,
saying its bottomline could be hurt more by an additional 3
million pounds if the European currency stayed at the current
level against the sterling.
Computacenter's worries about the weakness of the euro come
just days after shares of plastic packaging maker RPC Group Plc
fell on concerns about a weak euro hurting its
The announcement sent shares in Computacenter down as much
as 20 percent. They were trading down 16 percent at 300 pence at
0918 GMT on Thursday on the London Stock Exchange.
"This looks like the price of success, but we are concerned
that Computacenter seems to have underestimated the cost
impact," Panmure Gordon analyst George O'Connor said in a note.
"This smashes profitability and there is no quid pro quo at
this juncture, bar saying that managed services revenue is
growing at a clip faster than expected," O'Connor said.