Computacenter pays price of success with estimated £7m in extra costs

Too much new business requires further investment to cope, says CEO

IT infrastructure company Computacenter has said that its positive year of increased contract wins has created additional costs for the company.

Mike Norris, CEO of Computacenter said: "While we highlighted the necessity for investment in our statement of 18 April 2012, both the size and scope of the opportunities we have won have increased significantly, requiring us to invest further."

Computacenter has estimated that the increased investment could run as high as £7m, causing its share prices to drop by 14% today. In addition, depreciation of the euro could cost the company a further £3m.

"The take-on cost of this new business includes, but is not limited to, the recruitment of more than 700 new services personnel and the transfer of many staff from customers and their historical suppliers," said Computacenter.

It cited material recruitment and training costs for the new starters, as well as back office and customer-facing investment as substantial areas of expenditure.

Investment bank Panmure Gordon & Co stated: "This looks like the price of success, but we are concerned that Computacenter seems to have underestimated the cost impact."