JSE-listed Siltek's share price has taken a knock, losing 34% of its value in early trade despite prior warning about lower than expected profits for the six months to December.
The group suffered from what it describes as a "sharp sustained downturn in demand for IT products in the second half of 2000".
It has also bemoaned a volatile rand/dollar exchange rate, which it says has created an uncertain trading environment.
Siltek posted an operating loss of R39 million for the interim period, compared to an operating profit of R54.8 million for the year-ago period.
The loss came off a slightly increased turnover of R1.87 billion, compared to the R1.66 billion achieved in 1999.
The company still derives most of its revenue from its hardware and consumables division, which turned in R1.5 billion for the period. However, results for the division show a loss for the six months of R34.9 million.
The company also suffered from One Technology Group and Prion Technology's failure to achieve the volumes and growth originally expected. Siltek acquired One Technology Group and Prion, an Australian IT distributor, in 1999. Siltek management says it has been forced to spend additional money on rationalising the companies.
The board is also revising its position with regard to its Australian division after "disappointing" results.
New CEO Dave Lello and his board say they remain confident that a reduction in overheads and a renewed focus on profitable product lines will result in the volume product operations producing improved results.
Despite prior warning, markets punished the Siltek share; the counter dropped 34% to 45c in early trade.
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