This morning Phoenix IT has unveiled interim results and a second half outlook which undoubtedly reflect the tough conditions in its markets. Meanwhile, the IT infrastructure firm is announcing a further reorganisation of the company that will see a more unified Phoenix emerge during 2012.
Phoenix’s revenues in the six months to September fell 4% to £132.3m. EBIT was down 12% at £13.9m, meaning EBIT margin fell from 11.4% to 10.5%. The company said second half performance would be in line with H1, signalling similar declines in revenue and profit. Thanks to this downbeat short-term outlook, shares in the company are down 11% in early trading this morning.
When we spoke to CEO David Courtley this morning, he used words like “satisfactory” and “reasonable” to describe this set of results. And he is entirely right that Phoenix is facing tough conditions in its markets, be that in mid-market services and business continuity or in its “partner” activities with large IT outsourcers. But having been in the job since August (see Phoenix courts Courtley) he also clearly sees opportunities for Phoenix to take better advantage of the rapidly evolving infrastructure services market and to defend itself against some of the threats being opened up by virtualisation and cloud. Hence today’s announcement that the company will go through another restructuring process in 2012. The big idea is to finally do away with Phoenix’s separate businesses and put the resources of the company behind unified operations in sales, service, delivery and support functions.
In a market where vigorous cross-selling/up-selling of services and cost-effective delivery are vital for any infrastructure services player, such an approach looks sensible on paper. And given today’s results and the outlook for the rest of its financial year, Phoenix clearly needs to address its performance.
We’ll bring HotViewsExtra subscribers more reflections on Phoenix’s results and the proposed reorganisation once we’ve had a chance to digest our discussions with management this morning.