Compaq Acquisition Expands reach of Financing Umbrella
by: hlpinout
December 07, 1998, Issue: 820
Section: Service & Support
Compaq acquisition expands reach of financing umbrella
Jennifer Mateyaschuk
Special from InformationWeek -- Compaq Computer Corp.'s financial arm,
Compaq Capital, last week acquired the Digital Financial Services assets from GE Capital Corp. The move reflects Compaq's efforts to consolidate its financing businesses under one umbrella.
Digital Equipment sold its licensing unit to GE Capital, the services arm of General Electric Co., in 1993. Executives at Houston-based Compaq said the acquisition is a natural next step following its $8.4 billion acquisition of Digital earlier this year.
Compaq Capital made a similar deal when it acquired CC Finance LLC from Dana Commercial Credit (DCC) in September. DCC had created CC Finance in the spring of 1997 to deliver Compaq-branded financial products to resellers nd small to midsize-business customers.
Compaq Capital, which had established its own sales and service operations to focus on enterprise customers, now can offer leasing arrangements for all ompaq computer products to businesses ranging from small companies to large corporate customers. The agreement "gives all of Compaq's resellers and customers the advantage of in- house financing for their information technology and services," said Irving Rothman, president and chief executive of Compaq Capital, in a statement.
Digital ran its own leasing division prior to selling it to GE Capital and entering into a private-label service-provider relationship.
Compaq Capital secured its first major financing partnership this fall when it signed a deal with Entex Information Services Inc., Rye Brook, N.Y., covering both leasing and end-user financing.
The acquisitions are part of an ongoing effort by enterprise vendors to offer more creative purchasing options for customers directly, and for channel partners to offer indirectly. IBM Corp. and Hewlett-Packard Co. had a head start on Compaq Capital, as both owned financial subsidiaries that each is able to leverage in order to bundle hardware, software and service sales together.
After winning the Entex deal, Compaq Capital was talking with "all the major players," Rothman said, without disclosing who the potential partners were.
Entex's financing relationship with Compaq Capital will cover Compaq and non-Compaq products and soft costs such as software, installation and training on equipment and services worth $1,000 or more, the companies said.
Entex had a leasing and financing partnership with IBM Credit Corp. but decided not to renew it when IBM Credit eliminated its channel marketing group. In Entex's case, about 12 percent of its product revenue is generated from leasing and about 45 percent to 50 percent of its accounts ask for leasing as an option.
InformationWeek is a CMP Media publication.
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