A Bermuda computer company with a good track record yesterday announced it had made its first loss in its 25-year history after a change in the market and customers buying over the Internet hit the company hard.

Bermuda Computer Services Limited yesterday released its 1999 results, reporting a loss for the year $181,921.

In a joint statement chairman Donald Lines and President Susan Wilson said: "The year ending 31st December 1999 was a demanding yet disappointing year as for the first time in over 25 years we are reporting a loss for the year amounting to $181,921.

"This loss is the result of operating losses of The Computer Store combined with an inventory write-off in connection with the carrying cost of PC spare parts and equipment.'' They said the loss was mainly attributable to the rapid change in the personal computer market and the way product is delivered to the end consumer.

Last year the company advised shareholders that the downward pressures on margins and a shift in direction of information technology would negatively impact on the results for 1999.

They advised shareholders that they could not guarantee an upturn in profits for the coming year.

The statement said: "We must also advise shareholders this year that, although we are forging ahead with the communications business investment, it is highly speculative in that we are unsure if the global indicators concerning e-Commerce will materialise for Bermuda.

"It will only be with minimal regulation and Government encouragement that Bermuda can position itself globally to capture some of the offshore e-Commerce business. It is hoped that the e-Commerce regulatory approach will be `light-handed' and mirror that of the other sectors of the international business thereby allowing this infant business to flourish.'' Bermuda Computer Services reports fall Total assets of the group as at December 31st, 1999 amounted to $5,087,025 including fixed assets of $2,462,050 compared with total assets of $6,357,225 and fixed assets of $2,437,095 a year ago.

The company had cash and time deposits of $446,164 as at December 31st, 2000 compared with $1,581,400 last year.

Shareholders' equity has decreased from $2,786,991 to $2,020,070 this year as a result of the payment of a dividend of $585,000 in respect to the prior year's record earnings and the loss for the year of $181,291. The company's BCS Agencies Limited, which handles all of the IBM agency business, other than PCs and communications, and contributed earnings (before corporate overheads) of $370,000 as compared to the record year in 1998 when agency earnings totalled $572,337.

The Computer Centre, the division of the company that handles sales of IBM personal computers and other peripherals, had an operating loss of $556,199 on sales of $3,994,157 compared with profits of $642,190 on sales of $6,127,042 a year ago.

The statement said: "Herein lies the greatest problem and the major contributor to the disappointing results for the year under review. Several factors contributed to these results: Globally, and in Bermuda, the personal computer marketplace is going through significant changes and new competitive threats. Consumer and corporate customers are price shopping and purchasing directly over the Internet.

"Current technology is such that modular components and reliability have simplified the hardware to such an extent that down time is at a minimum and customers are willing to take the risk of direct purchasing for price advantages. As manufacturers, including IBM, compete to maintain and grow their market share, not only are prices and margins under increasingly downward pressure but also the manufacturers are having to find new and efficient ways of delivering their products to market.

"It is expected that this method of direct sales through the Internet and `build to order' personal computers will eventually dominate the market.'' Transact-e-Biz.com (Bermuda) Limited, the communications subsidiary, only made a marginal contribution to the overall result in the amount of $30,641.