Black Box CEO Takes Sales Force To Task

Calling his company’s sales efforts ’unacceptable’ amid a restructuring of his sales force, the CEO of Black Box Network Services didn’t hold back in assessing the firm’s performance Wednesday after losing nearly $130 million in the second quarter of the company’s 2016 fiscal year.

Michael McAndrew cited "disappointing performance’ on the sales side as Black Box saw a 5 percent year-over-year drop in sales revenue, from $249 million to $237 million, slightly missing the company’s expectations. Black Box’s net loss, $129.8 million, represented a vast turnaround from net income of $3.2 million in the second quarter of 2014.

The stock price for Pittsburgh-based Black Box – No. 35 on CRN’s Solution Provider 500 - plummeted 8 percent to $14.89 during trading hours Tuesday, before sliding another 2 percent in after-hours trading following the company’s earnings call.

Black Box's salesforce has been going through a realignment throughout the last year, according to the company, but has yet to report any improvements in revenues or bookings, McAndrew indicated.

"To date, our new sales organization has not performed as expected." McAndrew said, adding that it failed to produce a sufficient backlog, which resulted in lower-than-anticipated bookings in the quarter after the company lost a large federal contract it was expecting to receive, while work from other federal government customers continues to slow.

McAndrew doesn’t see business from Washington increasing anytime soon. He said Black Box will reduce spending to account for the loss of business until the federal buying climate changes.

Second-quarter revenue also declined in the company's core commercial services business.

With the drops in those two business lines, the company doesn’t expect it to reverse during the final two quarters of its fiscal year.

Nonetheless, McAndrew said he "strongly’ believes the company’s transformation efforts ’essential to our long-term ability to effectively compete’ with existing and new solutions, McAndrew said. He added that he’s committed to the sales realignment.

On the bright side, the company's North American and international products businesses saw year-over-year revenue growth, according to McAndrew. He credited sales efforts in such areas as education and media.

Black Box lowered its full-year revenue forecast from a range of $965 to $980 million to $920 to $930 million.


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