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November 8, 1993

CALLHAVEN CUTS BACK ON NETWORKING, SERVICES, MAKES EIGHT STAFF REDUNDANT

By CBR Staff Writer

Apple Computer Inc and Sun Microsystems Inc dealer Callhaven Plc laid off eight staff and made plans to reduce emphasis on services last week. The decision, which will take it further into volume hardware sales, comes less than a year after the firm vowed to move into services and away from the box-shifting market (CI No 2,078). Most of the redundancies came from the London-based firm’s networking operation. Networks have been part of Callhaven’s business for over two years but only became autonomous as an independent business unit in January. The unit has been dissolved, and staff and operations were transferred into the Apple and Open Systems units. Roger Cox, chairman of the company, blamed the move on poorer performance from the networking business compared with the dealer’s hardware sales base. The concept around IBUs is that they are profit or loss centres, he said, adding, Networking has lost the most people… it has been changed to make it more responsive. The company currently derives 30% of revenue from the networking, maintenance, training, software development and multimedia operations although Cox predicts a decrease in this figure as the firm grows its hardware sales business. The growth will be handled by recently-installed UKP100,000 order processing and invoice control systems. Attributing the marketing U-turn to the effects of a changing industry, and predicting more cash and profit from the move, Cox dismisses concerns about the lower margins associated with high-volume hardware sales, saying that the computer market will eventually mirror the consumer electronics sector. If you ramp the hardware business up, then the average margin across an organisation will decrease, he says; So what? His other formula for volume growth is to sign more sites on a franchise basis, as has already happened with its Cardiff branch. Callhaven recently wrote off a large amount of stock in what Cox described as a car boot sale.

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