Information technology products merchant PC Connection announced further cost reduction measures this month, including layoffs to about 6% of its staff.
Company chairman/CEO Patricia Gallup said in a release that “customers are taking a wait-and-see attitude toward IT spending as they try to determine what their own demands, technology budgets, and staffing levels will be for the year. Sales are lower than expected, and we need to bring our cost structure in line with current revenues. The actions we are taking are expected to result in additional cost savings of up to $16 million in 2009.”
PC Connection saw its fourth-quarter and 12-month sales fall for the period ended Dec. 31. Net sales for the quarter decreased 10%, to $439.1 million and slipped 2%, to $1.75 billion for the fiscal year.
After further sales declines in January and February, PC Connection management predicts first quarter revenue to fall by at least 20%.
“The company will incur related severance charges of approximately $0.6 million in the first quarter of 2009 in connection with these initiatives,” Gallup added. “In view of the continuing decline in the demand environment, the company is committed to making further cost reductions as required.”
What’s more, the company will report an aggregate non-cash goodwill charge of $8.8 million, or $5.4 million net of taxes, during the fourth quarter of 2008. As a result, PC Connection will report a net loss of $2.7 million for the year ended Dec. 31.