Not surprisingly, VARs are not yet seeing any end to the economic turmoil described by the
public PLM companies in the last few weeks. Avatech Solutions (one of the few public
resellers in the engineering software space) reported a significant revenue decline for the
quarter ended March 31, and believes that the poor economy will continue for some time —
in fact, said the company, "we cannot predict when our business will return to traditional

For the third quarter of fiscal 2009, Avatech reported revenue of $8 million, compared to
$12.8 million a year ago and, for the nine months ended March 31, 2009, reported revenues
of $28.2 million, compared to $38.1 million.

“The building and manufacturing markets continue to be adversely affected by the
recession, forcing our customers to reduce costs and postpone investments in new
software and services. As part of our effort to drive revenue in this tough market, we are
working more closely than ever with our customers in an attempt to bring them improved
solutions that add value through enhanced productivity, reduced costs and improved
competitiveness. Our core focus right now is trying to balance providing premier service to
our large customer base and capturing incremental new business, while ensuring that we
manage our day to day operations in the spirit of protecting our cash and liquidity,” said
George Davis, Avatech CEO in a prepared statement.

When I spoke with Mr. Davis last month as part of a larger project on the VAR economy, he
gave a few pointers to other resellers struggling to make it through this economic valley:
watch your cash position, use this downtime to create new product offerings (services, work
processes training classes, etc.) to expand out of your current niches, stay close to your
customers so that you’re aware of their needs before they are, and don’t let go of good
people if at all possible.

Some VARs will perish in this recession — let’s hope it’s not too many.

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