The IT Wholesale division of ASX-listed mobile phone, accessory and IT distributor, Cellnet, was the star performer in its latest half-yearly results. The company reported an after-tax profit of $2.2 million on sales of $154.7 million to the ASX.
Cellnet's managing director, Stephen Harrison, said IT Wholesale's contribution was "one of the highlights" of the performance.
As IBM's largest PC division and standards-based servers distributor, the ITW division saw 27 per cent growth year-on-year and "increased market share", Harrison said. PC notebook sales increased by 10 per cent. Santo Pappalardo, the founder of IT Wholesale which was acquired by Cellnet in October 2000, has been rewarded for the continued success of the division.
He has been recently promoted to the position of chief operating officer for the group and serves as an executive director on the company's board.
The distributor's former IBM division manager, Darryl Tucker, now carries the tag of general manager with day-to-day responsibilities for the whole operation.
"I am still very much involved with IT Wholesale but it is now from a COO responsibility and reporting point of view," Pappalardo said. "Where previously I was just looking after IT Wholesale, I am now also in charge of Cellnet Telecommunications which is the group's Australian telco operations."
Pappalardo said that his COO appointment was all part of a restructure brought about by the resignation of Cellnet co-founder and former managing director, Mel Brookman.
He said that Tucker had been with IT Wholesale for "nearly 10 years" and that he was "more than capable" of handling the step up in responsibility.
"Basically [Tucker] has been with me from day one," Pappalardo said. "He managed the crucial IBM relationship over the years. He was my second-in-command and has been through the whole growth of the business. He knows it like the back of his hand."
Tucker said he was "looking forward to the challenge" of his new role and was aware of the responsibility it carried.
"IT Wholesale is now the largest division of Cellnet in terms of revenue contribution," he said. "We have grown the IBM business really well year after year but now to continue growing our business we also need to start expanding our range of products.
"This calendar year everything has been flying well. Sales are up again and everyone is achieving their targets."
Tucker said nothing much had changed since the company came up under the umbrella of Cellnet.
"Santo and I have always known what we wanted to do with the business and that is happening," he said. According to the ASX announcement, Cellnet's results were adversely affected by a $2.12 million stock write-off for obsolete telephone handsets. Pressures from declining hardware margins, lower vendor rebates and stiff competition across the board also impacted on the result but it was the telecommunications hardware side of the business that dragged the chain.
"The major area for difficulty was in the mobile handset market," the report said.