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UPDATE 2-Computacenter H1 tops hopes as IT spend picks up

Published 08/27/2010, 05:24 AM

* H1 adjusted pretax profit up 17 percent to 21.3 mln stg

* Strong rebound in company IT spending

* Confident on year despite public sector cuts

* Shares up 2.8 percent

(Adds CEO comments, analyst reactions, updates shares)

By Paul Sandle

LONDON, Aug 27 (Reuters) - British IT firm Computacenter beat analysts' expectations with a 16.6 percent rise in first-half profit, helped by a strong rebound in infrastructure spending by companies and growth in higher-margin IT services.

Shares in the group, which have lagged IT and software peers by 10 percent over the last three months, rose 2.8 percent to 284 pence by 0848 GMT.

Chief Executive Mike Norris said there had been a "big rebound" in product sales, up 15 percent, from a low base, eclipsing the long-term trend of growth in IT services.

"The big push is server related, bigger more powerful servers at the back end with more storage attached," he said. "We see probably greater growth from servers, particularly on the Intel platform, than in any other part of the market."

There were also more PC refreshes, driven by wider adoption of Microsoft's Windows 7 operating system, and there was more to come, he said.

Computacenter, which counts Morrison's supermarkets and Lloyds Banking Group as customers, reported adjusted pretax profit of 21.3 million pounds ($33.2 million) in the six months to end-June on revenue of 1.29 billion pounds, up 5.4 percent on a year earlier.

Panmure Gordon analyst George O'Connor said the results were better than expected, driven by strong product sales growth, and the group had given a confident outlook statement.

"For us Computacenter, the UK's largest corporate reseller, is a sure-footed way to gain exposure to the current hardware refresh cycle," he said.

Computacenter, which sold its trade distribution arm to Ingram Micro last year, said revenue in its IT services division grew 4.6 percent, ahead of industry growth forecasts of 2.4 percent for the year, due to its focus on reducing its customers' costs.

Germany was one weak spot, having had a "very tough" first quarter, but had started to recover and would return to growth in the third quarter, Norris said.

He also expected some spending in Britain to be brought forward ahead of the rise in VAT sales tax to 20 percent in January 2011, but the impact would be "broadly neutral" over the fourth quarter of 2010 and first quarter of 2011.

The company said a stronger industrial sector in Germany and financial sector in Britain would offset curbs in public-sector spending in the second half.

"We are confident that we are on track to meet our expectations for the year as a whole," the company said.

Analysts expect the company to report full-year profit of 58.3 million pounds, up from 48.4 million pounds a year ago, on revenue of 2.57 billion pounds, according to a Thomson Reuters I/B/E/S poll of four brokers.

The firm raised its interim dividend by 17 percent to 3.5 pence a share. (Editing by Michael Shields and Mark Potter)

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