COMPUTER GROUP MUSTEK'S SALES DROP IN A GROWING MARKET

Mergers, Acquisitions and Financial Results

Computer company Mustek has probably suffered a slight loss of market share as well as a dip in profit in the past six months of trading. Mustek manufactures SA's best-selling Mecer PCs as well as importing technology equipment from other suppliers. In the six months to December, its overall unit sales were 1% down on those of a year before in a market growing more than 15% a year.

The lower sales plus losses inflicted by its operations in Brazil left Mecer with a revenue of R1.57bn, down from R1.43bn, and a profit that dropped to R52m from a previous R55m. Headline earnings a share of 41c were down 9% from 45,2c. Nevertheless it declared an interim dividend of 30c a share.

Its major clients include the government and parastatals, and public sector spending on technology has been sluggish in the past few months. Mustek's growth prospects in the second half will depend on how much equipment the government buys, the volatility of the currency and the demand for hardware and software from corporate buyers and consumers.

CEO David Kan said the results were satisfactory, despite severe fluctuations in the rand-dollar exchange rate. Mecer Brazil suffered a loss of R10.6m even though its operations had already been scaled back after previous losses. Mustek will continue to operate in Brazil, but will not invest any more cash.

Business Day