Only two days after British & Commonwealth Plc totalled its Atlantic Computers leasing business, the gran’daddy of the business and the one player regarded as truly sound, Comdisco Inc, shocked Wall Street with a warning that second quarter profits would be as much as 25% to 30% lower than the year-ago quarter’s 60 cents a share. The news hit the market in the solar plexus and a rush of sell orders led to an imbalance and opening of trading in the stock was delayed. The news came as the depth of Atlantic’s problems became apparent, with thefirst 180 employees receiving redundancy notices. Comdisco says that its profit projection comes despite it having acquired and leased a record amount of equipment during the quarter – $550m of kit that will realise about $660m of firm, non-cancellable rentals during the initial lease term. The company blames the fact that the IBM mainframe market is at the end of a six-year lifecycle, so that customers are asking for short term operating leases but Comdisco must have known that months ago. It sees the effects of customers opting for short term operating leases as long-term mainframe leases expire remaining a factor until the IBM Summit introduction gets closer, so that full-year net will be down.
