Bell Micro is left to wonder; what could have been

We hear so often about the problems of credit card debt in Canadian society as well as in the U.S. When I look at what happened to Bell Microproducts (Nasdaq: BELM) it’s the debt burden that ultimately led to its fate of being acquired.

Let’s not forget that Bell Microproducts, created in 1987 by Don Bell, reached significant milestones such as $3 billion in revenue and it recently shipped its 100 millionth hard disk drive.

But when you are servicing a debt to the tune of US$33 million per year financing and profit will be difficult things to achieve. This is distribution after all. And, the massive US$350 million debt load cannot be overcome just by shipping hard drives.

Problems in Europe also did not help. Bell did manage to solve those problems a few years ago but it compounded the main problem it was facing. Also getting its stock delisted was another black eye. Companies that are trying to claw and scratch their way out of a hole just can’t have these kinds of annoyances. It dampens morale. It skews the market perception of your company and in general it is another fire to fight.

Bell Micro was in the process growing its data center business. That is where the market is heading, but Bell Micro could never reach its full potential in data centers with that amount of debt.

Roy Vallee, the CEO of Avnet, the company that acquired Bell Micro this week, summed it up best in my opinion. He said all these problems are distractions that get people off of the common goal.

Vallee told CDN that Avnet will wipe out the debt immediately after closing. That is a very smart move. It eliminates the financial burden and takes away a distraction. Becoming profitable is a lot easier when your first $33 million does not have to go to the bank.

On the down side, this acquisition will lead to a lot of good people losing their jobs and I’m sure CDN will be made aware of some of the higher profile executive departures.

The future of Bell Micro will now be in the hands of Avnet, but don’t think that just because Avnet is bigger that it will lose its focus on value add and building solutions. There not! In fact, look for them to really push the innovation envelope with its reseller customers in the next six to 18 months.

Speaking of money, Synnex made some this quarter. The corporation for the fiscal first quarter reported revenues of US$1.94 billion, an increase of 12.5 per cent compared to $1.72 billion for the fiscal quarter ended February 28, 2009. In the quarter, Synnex netted $23.2 million exceeding Wall Street expectations.

Ingram Micro has set April 29th as its date to release its first quarter results.

At Arrow Electronics Inc. there was a minor management shuffle. Vinnie Vellucci has been named president of Arrow North American Components reporting to Peter Kong, president of Arrow Global Components after the departure of Kurt Colehower. Vellucci has been with Arrow for an incredible 40 years.

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Jim Love, Chief Content Officer, IT World Canada

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Paolo Del Nibletto
Paolo Del Nibletto
Former editor of Computer Dealer News, covering Canada's IT channel community.

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