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MICROSOFT COMP CHANGE IMPACTS COLUMBUS Featured

ColumbusMicrosoft's new sales model cut into revenue for Dynamics reseller, Columbus, for the third quarter ended September 30. But the Copenhagen, Denmark-based company posted a 59-percent growth in EBITDA for the most recently ended period. EBITDA hit about $1.2 million in the period just ended. First-quarter revenue of about $32.9  million was about six-tenths of a percent higher than in last year's corresponding period.

In a prepared statement, Columbus noted that Microsoft had switched its model so that it now pays Columbus a sales commission instead of Columbus recognizing license revenue from Dynamics sales.  The company said the change was expected, but is happening faster than anticipated. The commissions are also recognized over three years. All VARs are affected, but because only a small number of resellers are publicly held companies, there is not much information on the industry impact.  However, during a conference call for its second quarter ended June 30, Edgewater Technology, which sells Dynamics products through its Fullscope operation, also reported the change. That company said it received the margin from the sale, but that its revenue was a mixture of full license sales and the contributed margin. Columbus said it had considered increasing revenue from consulting sales, which probably explains its failed effort to buy an undisclosed consulting firm during the quarter. The reseller is supporting revenue through the sale of its own products in four industries - manufacturing, food, retail and a group lumped in other. License revenue for the industry products rose to about $1.1 million, up 44.4 percent over a year ago.

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