Shares in computer distributor Renaissance Corporation have tumbled after the company announced today the immediate loss of exclusivity of distribution rights for Apple products including the hugely popular iPod.
Renaissance shares slumped 12 cents to 58c on the news.
The changes to Apple's New Zealand supply agreements had been foreshadowed last year, but were spelt out by Renaissance today - including likely falls in sales and profits from distribution of Apple goods.
"The main change will be the ability for some of the retailers we currently supply to `multi-source' Apple products - as is the case in other countries," Renaissance managing director Paul Johnston said.
A new contract had been signed with Apple today reflecting the new arrangements.
Sales volumes and profits achieved by Renaissance from its Apple distribution would fall, with the full impact spread over 2008 and 2009, Mr Johnston said.
In updating the company's profit forecast for the year to December 2007, Mr Johnston said it profits before tax should be in the $5 million to $5.5 million range previously indicated. "As we previously reported, trading in most market segments remained difficult throughout the year and this was compounded by several months of supply restrictions of computer products, mainly iMac and Apple portable products," he said.
Renaissance has recently been looking to diversify its business, which included buying Magnum Mac and Natcoll last year. Mr Johnston said non-Apple distribution activities would grow from 10 per cent of gross profits in 2006 to about 60 per cent in 2008.
Profits in 2008 were expected to show a "modest" increase over those for 2007.
The company had in the past two years emerged with a portfolio of businesses that would give it greater control over its own destiny. "Shareholders should ultimately enjoy greater value from the future earnings stream," Mr Johnston said.
- Fairfax Media
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