EOH shares plunge after termination
Microsoft remains an important part of EOH’s network.
EOH statement
Shares in EOH Holdings plunged by as much as 28.8% in Johannesburg yesterday morning after news emerged late on Monday that Microsoft had terminated two partner agreements with the JSE-listed technology services group.
TechCentral reported that Microsoft served notice on EOH Mthombo on Friday it plans to terminate the company’s Licensing Solution Provider agreement and its Microsoft Partner Network agreement.
EOH holds the Microsoft agreements through its EOH Mthombo subsidiary. They expire 30 days from the date of the notice of termination.
EOH Holdings head of investor relations Debbie Millar confirmed that the agreements had been terminated by Microsoft South Africa but said the group had not been given reasons by the software giant.
“We are engaging with them to understand their decision,” Millar said.
EOH issued a statement to shareholders yesterday, providing an update on the termination:
“EOH has been advised that Microsoft has given notice of its intention to terminate its channel partner agreement with EOH Mthombo, one of the group’s subsidiaries, with 30 days’ notice. At this stage, EOH has not been provided with any reason for the notice of termination.
“The effect of this notice, if acted on, will be that group subsidiary company EOH Mthombo will no longer be a direct reseller of Microsoft licences, with a profit impact of approximately R10-million in the current financial year.
“However, Microsoft remains an important part of EOH’s network of the more than 50 technology partners within the EOH group and resolution of this matter is a priority.
“EOH has initiated plans to ensure minimal disruption to customers and to limit the potential impact on the business, until more clarity has been obtained. In this regard, EOH Group CEO Stephen van Coller is actively engaging Microsoft to better understand and resolve this matter as soon as practically possible.”
This article was first published on TechCentral.