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Cellnet takes $83m revenue hit from loss of Telecom business

Cellnet takes $83m revenue hit from loss of Telecom business

The end of trans-Tasman distributor Cellnet’s contract with Telecom New Zealand last September resulted in an $83 million (A$65million) sales revenue fall for the half year to 31 December 2008.

The end of the Telecom distribution agreement was the biggest contributor to a 50 percent overall drop in the group’s sales revenue over the corresponding period last year – down to $121 million (A$94.7million), according to a statement to the Australian Stock Exchange.

Cellnet attributed the remainder of the decrease (A$30million) to the discontinuation of its transactional notebook and desktop distribution businesses in Australia. The company is now focusing on distribution of server and print products there, for which IBM is its largest vendor.

It reported a net loss of A$7.9 million from the discontinued, loss-making PC distribution businesses, including A$1.6 million in restructuring costs and the write off of intangible assets including goodwill, of A$2.3 million.

The distributor has undergone significant restructuring since October last year, and says it now has a “slimmer and more focused business model”.

“The return to the core business and core products has resulted in a leaner organisation able to focus on the parts of the business which can deliver a commercial return,” it says, adding its focus is on strengthening its balance sheet and eliminating borrowing.

Its overall loss for the period was A$10.2 million, including A$7.8 million from discontinued operations.

Cellnet laid off about 60 percent of its New Zealand warehouse and logistics staff ahead of ceasing its business with Telecom last September. It had worked with Telecom here since 1994.

Telecom replaced the company with another distributor, US-headquartered Brightstar, which opened logistics facilities here on appointment.


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