CROCOTHERY - stock.adobe.com

Coronavirus: Channel braces for challenging second quarter

There are growing signs that it is getting harder for partners and vendors to predict what will come next

There are signs that the channel is bracing itself for a challenging time ahead as most major markets continue in lockdown in reaction to the cornonavirus.

The message from the channel so far has been that it has been largely business as usual and there has not been a material impact on finances.

There were some positive signs that the immediate consequences of Covid-19 had driven a surge in laptops, remote working tools and peripherals. But the prospects of that lasting once people are set up to work at home is in doubt.

Figures from analyst house Canalys, which regularly canvasses resellers in its barometer programme, indicate that many were expecting revenue to start dropping next month.

In a quick poll of the channel, the firm found that 70% of partners surveyed across the globe are expecting second-quarter sales to fall year on year.

Canalys noted that many had enjoyed strong demand for notebooks and remote working solutions, and that had helped keep the first quarter looking healthy. But going forward, more than half predicted double-digit declines in Q2 as customers go into lockdown.

The poll found that 51% of partners were expecting declines of 10% or more in Q2, and one-fifth expected single-digit drops.

Some were feeling more optimistic, however, with 7% looking for a single-digit improvement and 8% expecting increases of more than 10% year on year in Q2.

Signs that uncertainty is mounting in the channel were lent more weight by Dell’s decision last night to pull its guidance for fiscal 2021.

The vendor had made some comments on what it expected from 2021 when it released its Q4 numbers at the end of February, but has stepped back from giving too much concrete guidance, given the ongoing pandemic.

Dell said in a filing: “While the company is currently seeing heightened interest in work-from-home solutions and continuing execution in its global supply chain, and remains confident in its liquidity position, it is unable to predict the extent to which the global Covid-19 pandemic may adversely impact its business operations, financial performance and results of operations for the current fiscal year.

“As a result of the rising level of uncertainty resulting from the pandemic, the company has determined to withdraw its previously issued full-year fiscal 2021 financial guidance. The company plans to provide more information during its first-quarter earnings call based on the information available at that time.”

Yesterday, datacentre and cloud services specialist Proact made it clear that at its annual general meeting in May, the board will back a proposal to cut the payment of dividends for the 2019 financial year, which would have been about SKR38m (£3m).

“Proact has a stable financial position with good liquidity and the board’s proposal is based solely on the uncertainty caused by Covid-19,” the firm said. “The company is well positioned in a market that is also characterised by rapid change with a focus on digital transformation and innovation. This change is largely focused on data and information management, which is becoming increasingly business-critical, and where Proact has long been a well-established specialist.”

Next Steps

MSP market may thrive in a downward economy

Security, RPA, managed cloud services drive demand

Read more on Sales and Customer Management

ComputerWeekly.com
ITChannel
Close