MicroAge Narrows Down Possibilities For Pinacor

MicroAge Inc. posted solid fourth-quarter results, thanks mostly to results from Pinacor Inc., but that was overshadowed by another delay in deciding how to create a separate shareholder base for the distribution company.

Last week, as Tempe-based MicroAge reached its latest self-imposed deadline, Chairman and Chief Executive Jeffrey McKeever said MicroAge, the parent company of distributor Pinacor, is focusing on one specific transaction.

But it is a complex deal with no assurances of reaching completion, McKeever said. He declined to set a new timetable for a deal. MicroAge originally planned to reveal its decision by year's end, before extending that deadline to Jan. 13. "We're focused on making the right decision and not letting the decision be forced by time," McKeever said.

Meanwhile, speculation over who might buy Pinacor reached a fever pitch. CHS Electronics Inc., Miami, remains the consensus favorite, but some sources suggested a third party may emerge.

Claudio Osorio, chairman and chief executive of CHS, would say only the company still plans to buy into the United States this year, after delaying plans to make a move in 1998 because of market conditions. "This is a poker game," he said.

Market conditions also have affected any possible deal involving Pinacor, McKeever said. "The volatility of the markets, as well as the depression of channel stocks have obviously slowed us down," McKeever said.

CHS shares, which plummeted in September and October, have since rebounded. CHS was trading around $17 per share last week.

But MicroAge should not feel rushed, said financial analysts. The company should wait and make the right deal, they said.

"They lost leverage by setting dates," said Mike Whitney, analyst at Advest Inc. "When there's a deadline, the buyer can say you're committed," which could force a deal at a lower price, he said.

As for its financial results, MicroAge recorded $1.6 billion in revenue for its fourth quarter ended Nov. 1, compared with $1.3 billion a year ago. Net income of $3.7 million, compared with $7.4 million a year ago.

MicroAge earned 18 cents per share, beating First Call Corp. estimates by 3 cents.

For the first time, the company revealed specific results for Pinacor. The distributor reported a pre-tax profit of $24.7 million on $1.4 billion in revenue. Meanwhile, the integration business lost $7.6 million on $492 million in revenue.

PEDRO PEREIRA contributed to this story.

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