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Regions, services shield Didata

Johannesburg - Geographic diversification and a healthy services business have protected specialist IT services group Dimension Data Holdings (Didata) from the full effects of the economic slowdown, said analysts.

"The recession has affected different parts of the world differently and Didata's wide geographic footprint has cushioned the company from the worst of the crisis," said Frost & Sullivan ICT analyst Spiwe Chireka.

"Didata has also become more service- and value-orientated, rather than product-orientated, in response to declines in product purchases."

Company brands include Dimension Data, Internet Solutions and Plessey.

On Wednesday the group reported its interim results to end-March 2009. While its product revenue remained muted, revenue for its services business increased by 21.1% and was driven by 25.2% growth in managed services in particular.

"The financial crisis has led to IT spend constraints and consequently lower sales," said Chireka. "Companies have shown that they would rather bleed their technology in the short term than make huge investments into additional infrastructure."

Chireka expects Didata will focus on client services in the short term to shore up revenue.

Along with its services business, the company's overall regional performance was strong.

Revenue in the Middle East and Africa increased by 30%, that of Australia by 22% and Europe by 9%. This muted the 24% drop in revenue from the Americas and a 2% drop in Asia.

"With regions in the Middle East, Africa and Australia the company was able to offset negative performances elsewhere," said Irnest Kaplan, MD of Kaplan Equity Analysts . "Its global diversification and services saved the day.

Outsourcing could be key new revenue

"I think the company should just keep on doing what they've been doing," said Kaplan.

Chireka said there should be other areas for revenue growth as well.

"Outsourcing of technologies, networks and services may also become a key revenue stream as companies look for ways to stay afloat," said Chireka.

"Africa could present a willing market for this approach. IT infrastructure outsourcing is still nascent in large markets such as Nigeria and Kenya, which presents a huge opportunity for Didata on the continent."

Didata said it will be adopting a prudent expenditure and investment profile, but will make the most of prospects.

Despite the group's good performance, Didata CEO Brett Dawson remained cautious. "We believe it is too early to call an upturn in the market; however, we are optimistic about our future prospects and believe that Didata is well positioned for the long term."

By late afternoon on Wednesday, Didata shares were trading 6.17% up for the day at 637c.

- Fin24.com

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