Didata cautious on year ahead
Technology company Dimension Data (Didata) may be forced to take another look at its cost structures as the year progresses if the global financial crisis lasts longer than expected, said CEO Brett Dawson this week.
Didata had already constricted its running costs to cope with an extended downturn. Dawson expects the meltdown to last for at least another six months.
Recent actions to cut expenses saw it shed 25 jobs in the US, where revenue dipped as corporate clients cut their spending, and to put wage rises on hold.
Yet its results for the first quarter of the financial year were pleasing, Dawson said, as Didata was still growing in a market that was “clearly less attractive than it has ever been in our working careers”.
Revenue will be up 13% from the comparative quarter last year.
“We had an average growth rate of 20% for three or four years and in the current macroeconomy it’s not realistic to carry on growing at this rate when the market is contracting,” Dawson said at Didata’s conference for analysts.
“If the macroeconomy gets worse, we will go back and be more aggressive on costs in different parts of the world.”
Frost & Sullivan analyst Lindsay McDonald fears Dawson is being overly optimistic, as she predicts the global crisis could easily last another 18 months.
In SA the worst may be yet to come, she said, since it was unrealistic to think SA could escape the turmoil so lightly.
Didata took a severe beating in the early part of the decade when technology companies crashed.
But that was a very different environment as companies had largely brought the disaster upon themselves.
“Before it was business models that didn’t make sense and too much capacity put in place.
“We corrected our business model and took a lot of pain,” Dawson said.
“This is not about the technology industry having too much capacity — this is more general.”
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