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Curate's Egg

Earlier today, Reuters posted an article on some of the world's largest distributors of technology products and components. The good news seems to be that while Q2 2009 numbers are expected to be disappointing, a bounce towards the end of the year is something that analysts are 'cautiously hopeful' for, albeit principally in the US.

In Europe, there is less comfort. Reuters explained that Europe and its uncertain economic outlook pose a risk to the bottom line for Ingram Micro, while Tech Data is considered to employ a better cost structure in Europe, and may therefore be more resilient.

Ingram Micro at 30

Back on 16th July, Ingram Micro celebrated its 30th Birthday. The company was originally founded by husband and wife Geza Czige and Lorraine Mecca and called Micro D. It went public in 1983, but in 1989 it was acquired by privately-held Ingram Industries and then merged with another Ingram company, Ingram Computer [formerly, Software Distribution Services]. This new company was subsequently called Ingram Micro which became a public company in 1996.

To coincide with its 30th Birthday, Ingram Micro CEO Greg Spierkel was interviewed by ChannelWeb. While he mentioned some of Ingram Micro's largest suppliers - HP, Cisco and Apple in particular - Spierkel also discussed the importance of a handful of newer players from around the world, such as HTC from Taiwan, and Haier from China. Spierkel also spent some time discussing the attraction of China and India, and especially the size of the opportunity, and the speed with which these countries are developing their technological capabilities. Europe does get a mention, but mostly from the period when Spierkel was running the EMEA business - and that's some 10 years ago. So, just in case we forget it, the old world is part of a history tour, while the new world is a long haul flight away, and to the East, not the West.

Vasanta #2

Reuters reports that Electra Private Equity has walked away from its investment in Vasanta. Another private equity firm, Endless LLP, plus a syndicate of banks, has provided £30mn in new funds while significantly reducing Vasanta's debt burden. So, for now at least, Vasanta lives on to fight another day...

Vasanta #1

Vasanta has been in trouble for some months. Today's newspapers - both The Sunday Times and The Sunday Telegraph - carry stories saying that PWC has been lined up to act as the firm's administrator as a direct consequence of the withdrawal of credit insurance to key suppliers to the group.

Vasanta was created as a result of the 2007 merger of two of the UK's largest office supplies wholesalers - Kingfield Heath and ISA. It is understood that the primary rationale for this merger was based on the simple premise that scale is key in the wholesale distribution business. In principle, very sound business sense. Unfortunately, two other factors are also critical - compatibility and timing. The cultural differences between the two firms were well understood at the time - one a lean specialist, the other, a somewhat head-count heavy generalist. But back in 2007, no one could have predicted the seriousness of the current economic malaise.

In May of this year, Vasanta's owners - Electra Private Equity - made it clear that the firm was in trouble. In it's half year announcement, Electra said that it was writing down its carrying value in Vasanta by 95%, explaining that the removal of credit insurance had led to a significant increase in the company's debt levels. At that time, Reuters reported that Electra still 'believed' in Vasanta as an investment, stating that the company 'expected to reach a successful conclusion to current discussions with its banking syndicate, such that Vasanta will not report a breach of covenants'. Clearly, some few weeks further down the line, this has simply not happened.