Synnex chief: Resellers still hurting from downturn

The market may well be swinging upwards, but tough conditions experienced over during 2009 could see a few more resellers close their doors this year, Synnex’s local chief claims.

Synnex managing director, Kee Ong, said the broad-based distributor saw bad debt go up in the second half of last year, as resellers pushed out account payment cycles. He forecast the situation would continue through to June.

Ong’s comments follow the release of Synnex’s full-year financial results for Australia, New Zealand, China, Hong Kong and Taiwan. According to a statement, revenue for the 12 months to December 31, 2009 reached a record $7.92 billion, while pre-tax profits increased 44 per cent to $200m.

In Australia, Synnex experienced a good first-half but a flat second-half, Ong said.

He attributed the solid first-half to the Government’s economic stimulus in the consumer space, and tax concessions on ICT goods for businesses.

In contrast, several resellers hit the ropes or stretched out debt payment cycles as they dealt with the ramifications of the economic downturn, Ong said. He admitted Synnex had been affected by several of these resellers and said up to 10 were still on the distributor’s watchlist.

In the last three months of 2009, several significant players, including Leading Solutions, CommSys, and S Central, went into voluntary administration or sold-off their business assets after struggling to make ends meet.

While cautious about the first six months of 2010, Ong was confident its reseller base and the market would return to growth in the second-half.

“I’m optimistic about the second-half – things will settle down and the market will be much clearer,” he said.

Ong highlighted Windows 7 uptake and PC refreshes, the launch of USB 3.0 technology and renewed spending on servers, as key stimuli this year.

Although Synnex aggressive brought on new vendor relationships over the past 12 months, Ong said the focus this year was on driving sales of its expanded products portfolio.

“Last year was a special year for us – we needed to expand our vendor offerings to resellers. Many of those we brought on were key vendors we have wanted to partner with for a long time,” he said. “This year, we will try to consolidate and look at how we build better synergies with our partners to enrich our product offerings to resellers.”

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