Softchoice continues growth in spite of market conditions 13 February, 2009 By Chris Talbot

PromoPipeline Exclusive Channel Promotions Find Out How You Can Make Money Today! ENROLL FREE! >> Factory Direct Should Not be Cheaper William Vanderbilt - Innovative Learning Channels Cloud Ecosystem II: A Candid Conversation with Oracle Beth Vanni - Amazon Consulting Cloud Ecosystem: A Candid Conversation with Rackspace Hosting Beth Vanni - Amazon Consulting Channel Manager Compensation William Vanderbilt - Innovative Learning Channels Financial Expertise William Vanderbilt - Innovative Learning Channels

Total quarterly revenue was $335 million (U.S.), with gross profit topping $43.7 million.

Writing $43.6 million off in goodwill because of a broad decline in its share market price, Softchoice recorded a net loss of $21.9 million for the quarter, but the company still exceeded analyst expectations, said David MacDonald, president and CEO of Softchoice.

"We grew the business 26 per cent on revenue line and 17 per cent on operating line," he said.

In fact, certain businesses within the company grew considerably, driven by acquisitions the company has made over the last year. Annual hardware revenue for the entire year increased 121 per cent year-over-year, pushing hardware up to 41 per cent of Softchoice's total revenue (from 30 per cent in 2007). Much of the reason for the increase in hardware revenue had to do with the company's December 2007 acquisition of NexInnovations, noted Michelle Warren, president of MW Research & Consulting.

Although the quarter looked down because of the goodwill write-off, Warren described Softchoice's quarter as "great." Gross revenue was up quite a bit.

"This quarter marked the end of the year of the integration with NexInnovations, which is pretty exciting. That was a huge task," Warren said. It was a task that went fairly seamlessly for Softchoice, as well, she said.

Also important to the company's good fourth quarter was the opening up of new market opportunities with the achivement of Cisco Gold Status in the U.S., enabling Softchoice to support the sale and implementation of Cisco unified communications, wireless and datacenter solutions.

Softchoice was also named the top large account reseller (LAR) of the year for volume licensing sales by Microsoft Canada.

"It provides a competitive advantage for them," Warren said.

MacDonald noted that it felt like Softchoice was really gaining ground in the marketplace while some competitors were struggling. Its biggest growth areas were in the company's traditional software space (prior to become more broad-based in 2003, Softchoice's focus was on enterprise software), as well as in hardware and its high-end datacenter server virtualization practice. The company's storage business also continued to grow.

"It's definitely a more difficult environment that we're operating in than we were 12 months ago, so it's challenging. We have to work extra hard to justify solutions for our customers. It's certainly not helping us," MacDonald said about the economy and its impact on Softchoice's business.

However, he noted that the company is in a good position to take marketshare and deliver value for customers. It has streamlined its operations to improve efficiencies and focus more on value-added solutions and relationships, he said.

Warren attributed some of Softchoice's continued success during hard economic times to its broad end-customer base. The company focuses on the enterprise space, but it serves all sizes of enterprises. Resellers that have focused on one particular business size or vertical are the ones that are suffering the most right now, she said.

"They've done well in a difficult market," Warren said.