PC Connection Loses $2.1 Million In First Quarter; Revenue Falls 22 Percent

PC Connection

Analysts expected a loss of 5 cents per share, according to Thomson Financial/First Call.

The Merrimack-based direct marketer reported a profit in each quarter of 2001.

Last month, PC Connection warned of a loss of between 6 cents and 8 cents per share. Previously, analysts projected a profit of 6 cents per share for the recent quarter.

PC Connection reported revenue of $236.2 million in the quarter, compared with $301.8 million for the same period last year.

"We are encouraged that our commercial and consumer business appears to have stabilized, although we remain very disappointed with our overall results for the quarter," said Ken Koppel, CEO.

Restructuring costs of $813,000 and other special charges of $851,000 were included in the results.

During the quarter, PC Connection reached a settlement with Microsoft regarding the alleged sale of counterfeit products by the marketer.

PC Connection's commercial sales were $185.6 million, down from $187.5 million in the fourth quarter of 2001.

Federal government business in the recent first quarter was flat with the first quarter of 2001, Koppel said.

"We remain optimistic that the federal business will have another strong year in 2002," he said. "We are also cautiously optimistic that with a stable commercial business, seasonally better quarters for our GovConnection business and the addition of MoreDirect, the company will see improved results in the remaining three quarters of 2002."

PC Connection recently acquired MoreDirect.

The average order size for the first quarter was $894 compared with $1,040 in the year-ago quarter. Unassisted Internet sales accounted for 12 percent of total sales in the quarter.

Notebook computers accounted for 15.5 percent of sales in the first quarter, compared with 23.4 percent of sales for the same quarter last year. Desktops and servers accounted for 14.6 percent of sales, compared with 12.9 percent last year. The average selling prices of computer systems fell 21 percent from the corresponding period a year ago.

Shares of PC Connection closed at $10.27 Wednesday, up 2 cents per share.