The slide into administration of PC Science, a Yorkshire based PC manufacturer, was the result of a catalogue of errors.
Where the blame lies is still under debate.
Despite claims that the vendor’s demise was simply down to rapid over-expansion, the systems builder has steadily slipped from its high point a year ago to laying off 150 staff last week, leaving a skeleton crew of 30. The debt is estimated at £8m, see PC Dealer 14 July.
The likelihood of the company being picked up as a going concern is still an option, although there has been a marked change of tone from administrator KPMG.
The original announcement from Peter Terry, joint receiver, stated: “I am hopeful that we can sell the business as a going concern.”
But the latest statement revealed that Terry is now “unable to indicate at this stage whether a sale of the business could be achieved”.
It was Yorkshire Bank, the vendor’s venture capital backer, which appointed KPMG, due to concerns about the company’s accounts. Barclays Bank also issued a petition to the courts on 7 July – the day KPMG entered the offices and dismissed the directors.
The directors of PC Science were founder Charles Forsyth, Paul Baker, Christopher Rowbotham and Roger Bullivant.
Baker has been on leave for nearly a month. And, according to staff at Target Computer Maintenance, PC Science’s sister operation, Bullivant left the company three months ago.
Forsyth, Baker and Bullivant are also the directors of Target. However, the principal shareholder in both companies is stated as Forsyth’s wife, Shirley Ann Forsyth.
In April, Forsyth took on the role of sales and marketing director, appointing James Bailey to Forsyth’s old post of managing director. Bailey left his previous job as chairman and chief executive of Ultima Networks after a review of company activities in December 1998.
Forsyth has operated in the channel for more than 10 years, during which time four IT companies he has been involved in collapsed.
Norman Weibye, managing director of reseller Nordic Data, said: “When Forsyth was based in Scotland, two companies went bust on him – NTS and Multiplex. This is what seems to happen. It goes okay for a while, then the company folds.”
Steve Bennett, managing director of Software Warehouse, added: “At some point, questions have to be asked. I’ve been in business for 10 years and Forsyth has been in and out of it four times in that period. What I don’t understand is why distributors continue to give companies credit, ignoring track records.”
Bennett was particularly worried about the overall effect of this latest collapse: “Every time a company goes bust, it paints a terrible picture of our industry to the banks and trade insurers. And that in turn can push up premiums, which makes things more difficult both for my business and everybody else’s.”
The indications last year were that PC Science was in robust health. The last results recorded at Companies House, for the year ended 31 December 1997, showed profit at £889,000 and sales up 171 per cent at £12.5m.
However, 1998 proved to be a turbulent year. The vendor became involved in a war of words with Time Computers over an advertising campaign.
Time took its rival to the High Court in London, claiming that PC Science had copied Time’s adverts. The case was cut short when PC Science backed down.
Later in the year, the systems builder became the hero of the North East when it opted to open its production facility in the troubled Teeside area.
It received government incentives and was welcomed by an eager Teeside council, which had seen Fujitsu, Philips and Samsung slash jobs in the area.
At the time of moving to Teeside, Forsyth was reported as saying: “The government did very well. We procured the incentive within 10 days. The area has suffered badly recently. So the government was very forthcoming and that tipped the scales.”
Towards the end of 1998, PC Science machines were available in 868 UK outlets, including Argos and Comet. The manufacturer’s success peaked when it won the lucrative Asda PC supply contract, which seemed to guarantee its future.
But the company’s problems then started to snowball. First, it was reprimanded by the Advertising Standards Authority and then it was dumped by Argos.
Sources close to PC Science claimed there were reliability problems and that Argos had ditched the company due to the spiralling number of customer complaints it had received.
Fuel was added to this fire when PC Science sued Protac, its motherboard supplier, over compatibility issues.
PC Science claimed Protac had made “misrepresentations over the compatibility of the motherboards with other standard components used to make personal computers”.
According to the writ, PC Science had ordered about 20,000 motherboards.
Sources within PC Science revealed that a number of staff had raised questions regarding the componentry being used, but had been overruled by the management. Shortly afterwards, a number of technical and quality assurance staff left the company.
These compatibility problems continued as PC Science found itself under the scrutiny of both Trading Standards and the Office of Fair Trading (OFT). Complaints about the manufacturer to Trading Standards spiralled out of control and reached 400.
Len Swift, the trading standards officer who ran the investigation into PC Science, said: “It was fine until about Christmas, then it went bananas. We had to keep a close eye on the company and sent the case on to the OFT.”
However, the questions remain: who will be the white knight for a once-promising operation and where will Forsyth surface next?
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