Middle East retreat could cost Tech Data US$7m
Tech Data’s decision to pull out of the Middle East is set to cost the company between US$5m and US$7m in operating losses. The US-quoted firm disclosed the size of the hit it expects to take in a filing made to the Securities and Exchange Commission.
Tech Data’s decision to pull out of the Middle East is set to cost the company between US$5m and US$7m in operating losses. The US-quoted firm disclosed the size of the hit it expects to take in a filing made to the Securities and Exchange Commission (SEC).
The broadline distributor, which made sales of more than US$300m in the Middle East, axed its operations in the UAE last week after claiming it had become “increasingly difficult” to operate profitably in the region.
“As a result of this closure, the company expects to incur operating losses and other cash charges in the first half of fiscal 2008 of approximately US$5m to US$7m,” said Tech Data in a standard ‘Form 8-K’ filing submitted to the SEC.
The first six months of Tech Data’s fiscal 2008 calendar run between February 2007 and the end of July. In the corresponding half-year period last year it posted a net loss of US$142m on sales of US$9.88 billion.
As well as the charge for dumping its Middle East operation, Tech Data also said in its SEC filing that it will record an additional US$7m to US$9m of foreign currency exchange losses previously registered in shareholders’ equity as ‘accumulated other comprehensive (loss) income’.
This income is comprised of foreign currency translation adjustments relating to the net assets of its international subsidiaries.
Tech Data Middle East’s components and enterprise business has now been taken over by Track Distribution ME (TDME), a wholly-owned subsidiary of IT distributor Aptec Holdings. Aptec plans to run TDME as a standalone company from Tech Data’s former offices in Dubai.