Will it stay or will it go? As Datrontech?s share price dropped to below 100 pence from a high of about 300 pence, the two founders of the company took a back seat, issued a profit warning, and put ex-Frontline manager Mark Mulford in day-to-day control of the company.
There were redundancies after the recent profit warning but Mulford, who grew Frontline into the UK's distributor par excellence, dismisses tales that the founders will sell Datrontech as "products of the silly season". He said today: ?The bottom line today is the lads have no intent of selling. They?ve seen their shares at #3 a pop, they?re not hard up for a shekel or two and there is no way they are going to sell out.?
He added: ?Steve [King] and Ian [Boyle] own 60 per cent odd of the shares and 10 per cent of the company in trust and those shares are for performance in the company.?
Mulford compares Frontline and Datrontech all the time. He says that he grew Frontline to its premier position by picking the right teams and managers, and that is what he is doing with the memory distributor. In a brief three months, he has taken on Alison Heath, ex-CHS/Merisel sales director with eight years at Compaq, as his sales director; Mandy Birtles, ex-Creative Labs marketing manager and formerly at Frontline; and has just signed up Gerard Connolly as his group finance director. He came from Dawson Holdings but worked for TSB and Barclays Bank before.
There is obviously some purpose here. The appointments are Mulford?s own, though approved by the two founders. He admits that the decisions he has made will ruffle some feathers and that those with a negative attitude can leave for start-ups if they wish, but he says - over a nice cup of tea in his capacious new premises at Basingstoke - that Datrontech is moving away from its entrepreneurial days. He is taking a corporate stance.
Mulford said: ?Clearly the name of the game is to grow and to grow profitably. We don?t want to be a broadliner but we want broadline efficiencies. If you look at the specialist guys, all of the good ones pump a lot of volume. Ideal and Azlan are good examples. I see no reason why Datrontech shouldn?t do the same.?
Datrontech has skills other disties do not, he insists. ?Our skill areas are components, memory and connectivity. Our specialist companies have got their own corporate identity and we wouldn?t want to do away with that. I see no reason why we can?t build volumes. We can give some of the efficiencies of volume while not losing our specialisation.?
He hates suggestions that Datrontech is going broadline, even though it is changing its sales model. ?We?ll bring our management model into the UK at first and then into Europe. Datrontech has got knowledge and penetration into the market with a list of 15,000 assemblers. Forty per cent of PCs sold in this country are built by assemblers. When we talk to a vendor we can say we talk to them with that knowledge. I had Microsoft in yesterday and they have a list of 24,000 dealers in this country,? he said.
Things are not yet completely plug and play, he claimed. ?People will buy in different ways and buy PCs in the way they want to buy PCs. Some people, for example, are happy buying off the page but I can never see retail being 100 per cent of the market. PCs won?t be like VCRs, not in my working lifetime,? he said.
?The price differential between what Compaq can buy at and what we can buy at is not that great. It?s a a matter of bucks because this is a global market. An assembler has got no overheads and can buy components, which they can put together without R&D and all those horrible costs. If the supply side lasts as it has, and I see no reason why it shouldn?t, the assembler will always be able to come in at a lower cost,? continued Mulford.
Share price fluctuations are part of the game, said Mulford, who is full of plans nonetheless. ?Memory is bumpy as hell and the City hates memory, but we know memory. We buy well, we will do our own brand, start virtual companies in Taiwan and I think we should make our substrates blue rather than green so that people know where they come from.?
?If we can leverage both our specialist focus and also leverage 40-50 salespeople on the sales desk to sell all of our products, we will achieve our goals,? said Mulford. ?It all comes down to how you manage the company. You cannot sell a specialist product across a broadline desk and you cannot sell a broadline product across a specialist desk.?
Will Mulford succeed? The founders are behind him. Most of the staff are, and those that aren?t will have to accept that things change. He has a sound track record and has amassed a fortune that suggests he isn't working here because he has to. New partners are signing up - Adaptec in the past few days. Datrontech, Mulford asserts vigorously, is not up for sale.
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