IKON Office Solutions (VARBusiness 500 No. 21) reported disappointing first quarter 2008 earnings, primarily due to decreasing equipment sales, according to the solution provider's top executive.
Chairman and CEO Matthew J. Espe said sluggish results stemmed from lower-than-expected North American equipment revenue. In a conference call, Espe noted that IKON planned to work with vendors, adjust its go-to-market strategy and take steps to improve sales profitability. To that end, IKON is expected to reduce costs and expenses by $25 million in this fiscal year. Espe noted that the company does remain committed to a stock repurchase plan it embarked on in November 2007.
IKON's equipment revenue fell 6 percent to $393 million in 1Q 2008, from $416 million in 1Q 2007. The company closed fewer large transactions in the first quarter, mainly because customers are delaying buying decisions. IKON specializes in document management systems and services.
Earnings per share for the quarter ending December 31, 2007, were down to $0.13, including a $0.04 restructuring charge. Revenue was relatively flat, down 1 percent to $998 million, while net income slid to $15 million from $27.3 million a year earlier.
In a conference call, Espe noted that IKON planned to work with vendors, adjust its go-to-market strategy and take steps to improve sales profitability. To that end, IKON is expected to reduce costs and expenses by $25 million in this fiscal year. Espe noted that the company does remain committed to a stock repurchase plan it embarked on in November 2007.
The bright spot in the report was in managed and professional services, which reported revenue growth of seven percent, to $206 million from $192 million in the same period last year.
Within that realm, on-site managed services, which comprises some two-thirds of IKON's managed and professional services revenue, grew 10 percent. The company noted that was largely due to the expansion of existing contracts and new sites. Professional services grew nine percent, owing much of that increase to strong European business. However, off-site managed services decreased three percent.
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