Computer 2000 (C2000) wants to sell part of its loss-making US subsidiary Ameriquest Technologies, which has publicly admitted it is unable to compete in the US distribution market, but may sell it all.
Via a stock purchase, C2000 will inject $30 million this month into Ameriquest to make it more attractive. That adds to C2000?s majority stake in Ameriquest, which announced it is set to lose $45 million in its financial year to September 1997. In a bid to stem its haemorrhaging costs, Ameriquest will make an undisclosed number of staff redundant, close buildings and sell off assets by September, prompting sources to predict that C2000 will dispose of the company if it can find a buyer.
In a bleak statement, Ameriquest?s board admitted: ?The restructuring measures are necessitated by the fact that revenues for the quarter ended March 31, 1997 were substantially below expectations, primarily due to the inability of the company to compete effectively in the standard distribution of computer products. Management also continues the investigation of the possible disposition of business segments and other assets.? It refused to comment further.
Ameriquest blamed the projected 1997 loss on restructuring costs, which sources expect will be higher than the $25 million Ameriquest has anticipated. The company lost $33.6 million in its 1996.
Ameriquest said it will concentrate on its systems business, the advanced systems group, which sells Hewlett-Packard and IBM server and workstation business, but admitted even this portion of the business is making a loss. This suggests company could pull out of broadline distribution if a buyer can be found for its volume product businesses.
C2000 promised to use Ameriquest to attack the American distributors in their own territory, a strategy which has failed. Ameriquest has drained money from the giant wholesaler, including a $50 million cash injection in March 1996, and has had countless changes at board level.
Successful C2000 veterans - former co-president Steve De Windt and former Frontline MD Mark Mulford - have left the board after struggling against competition from US monoliths Arrow Electronics, Ingram Micro, Merisel and Tech Data. Ingram executives were abroad and unable to comment on Ameriquest.
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