Compaq-Inacom Deal Raises Concern
By Jerry Rosa & Scott Campbell Computer Reseller News
New York
12:25 PM EST Fri., Jan. 07, 2000
Some Inacom Corp. VARs expressed concern last week over the company's sale of its logistics operations to Compaq Computer Corp., though distributors viewed it as the elimination of a competitor.
Compaq agreed to pay Omaha-based Inacom $370 million for its four distribution and configuration centers, giving the vendor such capabilities as complex configuration, asset planning and tracking, better predictability and lower inventories of Compaq PCs, servers and notebooks. The move lets Inacom concentrate on its integration business.
Compaq, Houston, said it will run the operations as a wholly owned subsidiary, without cutting any of Inacom's 2,500 employees. Compaq also agreed to configure third-party products by IBM Corp. and Hewlett-Packard Co. for Inacom customers and VARs for the next three years.
The deal does not change Inacom's relationship with its VARs, said Gerry Gagliardi, Inacom's president and chief executive.
However, some VARs are concerned about whether they can depend on Compaq to provide and configure IBM and HP products. "I'm not sure how this Compaq-acquired distribution company is going to act in the real world," said Joe Weis, president of Uinta Business Systems, a Salt Lake City-based Inacom reseller.
Mark Stellini, president of InfoSystems Inc., Wilmington, Del., which buys at least 50 percent of its products from Inacom, was confident. "Keeping the same people running it is certainly a plus, and it's business as usual as long as Compaq runs it hands-off," he said.
The acquisition is strategic for Compaq, which has struggled with its direct program, PartnerDirect, said Compaq President and Chief Executive Michael Capellas. "One of our key objectives was to increase our direct business," Capellas said. "This purchase will accelerate our ability to work with our direct customers and offer an array of third-party products."
For Inacom, selling the operations means offloading a costly operation running at 50 percent capacity, Gagliardi said. "I feel like we outsourced it, and in one fell swoop we moved into a services model," he said.
In addition, a second part of the deal gives Inacom $420 million over the next three years for providing services to Compaq customers.
The deal should not effect Compaq's Distributor Alliance Program, said Alliance partners.
Executives at Ingram Micro Inc., Tech Data Corp. and Merisel Inc. said the loss of a competitor may create new opportunities.
"Inacom was doing $1 billion to $1.5- billion in distribution with their Inacom franchises. I think that's all available for the good guys now," said Jerre Stead, chairman and chief executive of Ingram Micro, Santa Ana, Calif.
If nothing else, the deal validates the distribution channel, said Dwight Steffensen, chairman and chief executive of Merisel, El Segundo, Calif. "[Compaq] has established a value for distribution," Steffensen said. "It's a recognition for the distribution channel and for the functions provided by distribution."
Steve Raymund, chairman and chief executive of Clearwater, Fla.-based Tech Data, said Compaq got a good deal. "[Compaq] picked up a backroom machine for a bargain," Raymund said. "If they tried to reproduce the capabilities embodied in the Inacom assets, it might have been much more expensive."
Wall Street seemed unimpressed with the deal. Inacom's stock fell to $6 on Jan.6. from $9 on Jan. 4.
For more on the Compaq deal, go to: www.crn.com/thisweek
crn.com |
