Can Bell Micro become the comeback kid?

Can Bell Micro make a comeback and undo the damage done by its delisting from Nasdaq?

The California-based storage distie is trying to regain momentum in North America, after reporting a 23 per cent decline in its fourth-quarter sales – and that means boosting its line card, improving customer service and making a few personnel changes.

Last year, the distie was delisted from Nasdaq for not completing period reports with the Securities and Exchange Commission; it then began trading on the Pink Sheet OTC market. It’s awaiting completion of an audit of its financials, dating back to 2006.

This all happened, of course, before we were hit with a recession. So now Bell Micro is faced with a double-whammy: dealing with its Wall Street baggage, at a time when Wall Street is pre-occupied with other things. What is it now – swine flu?

The distie’s priority this year is to get its financial reporting up to snuff and regain its listing on Nasdaq – all the while dealing with the economic downturn. So, it’s making some changes, while continuing to focus on storage and high-growth areas like surveillance and healthcare.

The distie has promoted Chuck Kostalnick – who comes from the Technology Solutions Group – to president of North American distribution. He’ll be responsible for all sales and marketing business units in North America (and replaces Jerry Kagele, who left to pursue other opportunities).

Back in February, Bell Micro merged five sales units into two, resulting in a number of layoffs. At that time, Kostalnick was promoted to head up the combined sales force. But, with his latest promotion, he’s got a tough job ahead of him.

It’s hard to say whether the distie’s poor financial results are related to the recession or a loss of customer confidence – or a combination of both – but Kostalnick’s goal is to grow its market share each quarter.

And he plans to do this by improving customer service, targeting solution providers focused on key verticals such as surveillance and healthcare in mid-size and enterprise markets. Right now it has about 900 such VARs, but it estimates there are 3,000 to 5,000 out there, so it’s a fairly large untapped market.

But not only does Bell Micro have to battle the recession, it has to build relationships within that untapped market – and some VARs may be hesitant to do business with the distie until it regains its listing on Nasdaq.

On the other hand, they may not care all that much. Bell Micro has been boosting its 10-Gigabit Ethernet line card (a fast-growth segment within the networking market) with vendors such as Blade Network Technologies, Chelsio Communications, Fujitsu, NetXen and SMC Networks.

It has also been boosting its offerings in security, signing distribution agreements with vendors like Vasco for its authentication and e-signature solutions and Elitecore Technologies for its Cyberoam Unified Threat Management appliances. And the distie continues to have strong partnerships with reputable vendors, such as HP.Now if it could just resolve its Wall Street woes.

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Jim Love, Chief Content Officer, IT World Canada

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Vawn Himmelsbach
Vawn Himmelsbach
Is a Toronto-based journalist and regular contributor to IT World Canada's publications.

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