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Thu 3 Aug 2006 04:00 AM

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Poaching politics

With the summer job shuffle in full swing in the Middle East IT channel, vendors would do well to choose their targets wisely and ensure that their recruitment decisions do not cause bad blood in terms of ongoing business relationships.

With the summer job shuffle in full swing in the Middle East IT channel, vendors would do well to choose their targets wisely and ensure that their recruitment decisions do not cause bad blood in terms of ongoing business relationships.

There has been some real fun and games lately, especially over at Tech Data, which has ended its distribution contracts with both 3Com and Tripp Lite, with at least one of these terminations linked to poaching politics. In fact, according to insiders at Tech Data there could still be more shake-ups to the distributor’s portfolio as a result of vendors coming in and poaching staff.

The important point to make here is that a certain percentage of employees will always look to move on from an organisation. For many individuals working in the distribution channel, making the step up to the vendor level is something that they actively aspire to. All distributors accept this; but when a member of staff moves to a vendor partner, a degree of common courtesy from the recruiting company can go a long way to ease the pain.

Talking of Tech Data, Adnan Al Falah’s decision to step down as managing director of the Middle East operation has also set tongues wagging. While a replacement has already been named and is due to come on board later this month, you get the impression that the company is going through a fairly turbulent period.

On an EMEA level, Tech Data is facing serious operational issues that have impacted the distribution giant’s global results. Releasing its preliminary second quarter results in the US, Tech Data announced that sales were below expectations at US$4.94 billion with the predicted net income of between US$17m to US$20m wiped out and the company now expecting to be ‘near breakeven’ for the quarter.

The EMEA theatre is bearing the brunt of the blame for the lacklustre financial showing from Tech Data. However, within that theatre it is difficult to ascertain how much is down to operating issues in Europe and the level of influence that the Middle East and Africa business has on the overall picture. Tech Data’s stock market announcement mentioned both lower than expected sales in EMEA and lower than expected margins.

Steve Raymund, Tech Data’s CEO and chairman, pulled no punches in his assessment of the situation. “We are clearly disappointed with our operating performance in EMEA. While our restructuring programme and related efforts to realign our EMEA organization over the last year have provided benefits, the internal disruptions related to such initiatives coupled with the challenging market environment and competitive margin conditions have hindered our progress. It will undoubtedly take longer than originally anticipated to improve our operating performance in EMEA. In the Americas, we continue to perform within our expectations in a market that has been very competitive,” he said.

With no financial breakdown for Tech Data’s numbers within the EMEA region it is tough to assess the profitability of the Middle East operation. Of course, Tech Data was one of the distributors impacted by the recent credit crisis in Dubai related to runaway Intel traders.

The company claimed at the time that it had credit insurance, but several sources close to the distributor have said that the situation is not quite as black and white as Tech Data would have the market believe. It would be interesting to know if the Dubai credit crisis made a dent on Tech Data’s second quarter EMEA profitability.

Over at HP towers, there is still no word on the replacement for Hazem Bazan in the role of regional SPO manager. Regional PSG boss Anil Gandhi is playing an active role in the recruitment process and an appointment is expected sooner rather than later with an internal candidate more likely to land the channel job.

Elsewhere, software behemoth Microsoft looks like it is finally starting to get serious about promoting its peripherals products in the Middle East market. The company is in the process of selecting a retail-focused distributor capable of taking its range of keyboards, mice, joysticks and select software title to the retail channel. The appointment could be made this week and Delta Business Products looks a firm favourite for the role.

As always, your comments, feedback and tip-offs regarding events in the Middle East channel are more than welcome. Just e-mail stuart.wilson@itp.com or call +971 4 3910 882

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