Insight prepares for $10m impact of Microsoft fee cuts


Insight prepares for $10m impact of Microsoft fee cuts

Microscope contributor

Insight Enterprises is making plans to "mitigate" the pending changes to Microsoft LAR fees that it estimates will impact gross profits by many millions of dollars in 2012.

As revealed by MicroScope last week, the software giant is implementing sweeping changes to the fees that LARs will make from Enterprise Agreements from September, as it drives that partner community to the less penetrated mid-market.

"Additional details of the new programmes have recently been announced and as a result, the company has updated its analysis and now expects the full year 2012 impact on gross profit to be between $5m to $10m," Insight said last night.

"The programme changes will be finalised over the coming months and in the meantime, the company is implementing action plans intended to help mitigate this expected impact," it added.

The admonition was made as Insight rolled out Q4 numbers, showing a 14% rise in turnover to $1.33bn as profits climbed 43% to $25m. For the year, Insight made $75m, up from $30.7m on the back of 16% growth in sales to $4.8bn.

"The technology refresh cycle provided a nice tailwind for our business in 2010," said Insight boss Ken Lamneck. "Our team executed very well to ensure we participated in the market recovery and even grew share in certain categories".

In North America, sales went up 17% to $915m, with hardware and software rising 21% and 16% respectively but services declined 10%, a setback to the firm's ambitions to expand its annuity revenue base.

The EMEA operation recorded a 4% rise in sales to $366m but excluding the impact of foreign currency movement, sales increased 11% as hardware and software went up 2% and 15%. Services climbed 64% but from a small sales base.

For 2011, Insight projected global IT market growth to be in the mid-single digit range but expects to exceed this with higher rates forecast for H1.

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