CompuCom Earnings Fall 33 Percent On Weak Product Sales

The Dallas-based solution provider said it earned $3.28 million, or 6 cents per diluted share, compared with profits of $4.72 million, or 9 cents per diluted share, in second-quarter 2002.

Revenue for the quarter also fell more than 11 percent year over year, with sales of $377.7 million for the period compared with $426.2 million a year earlier.

Coleman admitted that the company did not perform as well as expected, attributing it primarily to continuing soft corporate demand, which impacted product sales. He said services revenue was also impacted by delays in projects. Services revenue for the quarter totaled $73 million, compared with $75.9 million for the year-earlier period. Coleman said services account for 55 percent of the company's gross margin dollars.

Services gross margins were 33 percent for the quarter, down from 36.9 during second-quarter 2002.

Product sales totaled $304.7 million for the period, down from $350.3 million a year earlier. Product gross margins fell to 6.5 percent, down from 7.5 percent.

But Coleman said in a conference call following the earnings report that business seems to be picking up. "July is off to a better start, and we are encouraged the way the third quarter is beginning," he said.