Johannesburg, South Africa-based Didata said it expects revenue for the six-month period ending March 31, 2003 to be slightly lower than the $1.09bn it made in the second half of 2002, and said its gross profit margin would be lower than expected at 19%, compared to previous guidance of 20.7%.

Part of the problem is its publicly listed Asian operation Datacraft Asia, which continues to struggle against declining demand for reselling and value-added services. It is also undergoing an investigation for fraud against its directors.

Didata said it now expects to take restructuring charges of $3.5m and impairment charges of $8m against Datacraft during the first half. However, excluding this, the company said it would achieve break-even. This compares to an operating profit before goodwill amortization and exceptional charges of $17m in the first half of 2002, and Didata said it expects this to have a significant impact on the group results.

Meanwhile, the company’s US operation unexpectedly suffered a sharp decline in demand for its core reselling activities and related IT services, especially for products from key partner Cisco Systems Inc. The US operation is now expected to make a loss for the first half, despite being downsized to achieve month-by-month break-even, and it will take an additional $4m charge for further cutbacks.

Commenting on the crisis, the company said: The conditions in which the group operates remain difficult, and visibility remains limited. In these circumstances, the group will continue to closely monitor trading conditions, and manage its cost base accordingly.

Didata has swept through a major restructuring of its operations over the past year, and has axed some 23% of its workforce. Last October, the company went through a management shake-up, with 10 board members resigning to take up positions on a new executive committee and US and regional boards. Following the share slump, Didata now has a market capitalization of only 208m pounds ($332.8m), a fraction of its $2.19bn revenue in 2002, and less than its current cash balance of $270m.

Source: Computerwire