Calling Collect: Ingram Micro May Re-examine Credit Policies

Ingram Micro was Micro Warehouse's largest creditor according to the Chapter 11 filing by Micro Warehouse dated Sept. 8. The Norwalk, Conn.-based solution provider did about $75 million in sales with Ingram Micro during the second quarter, according to the distributor.

Ingram Micro expects to record a third-quarter charge of up to $20 million (approximately $13 million net of tax) because of Micro Warehouse's bankruptcy, the distributor reported Wednesday.

Kent Foster, chairman and CEO of Ingram Micro, said lending credit to large companies is part of the risk of doing business, but the distributor will evaluate its credit policies.

"Any time you have a major problem or you take a major hit you look to see what lessons can be learned. That's what we going through now," Foster said. "I'm sure there will be some lessons learned."

Ingram Micro was aware of Micro Warehouse's debt but decided that a steady stream of product was a better bet to help the solution provider, said Foster.

"Credit is very important to our customers. It's one of the values we bring to the marketplace. What we did here is try to support the customer, to keep that support, rather than withdraw it and create a problem for them. If you do this, you take risk," Foster said.

Foster defended Ingram Micro's past credit history, noting that examples such as Micro Warehouse are rare.

"We've had a good track record going back the last 3 1/2 years. We've managed [credit] very well. We look at this for lessons learned to see what can be done to improve processes," he said.

Micro Warehouse reported more than 1,000 creditors. Other notable creditors listed in the filing include Hewlett-Packard ($8.6 million), Toshiba America($3.1 million), Microsoft ($2.2 million), Bell Microproducts ($1.5 million), Comstor ($1 million) and PC Wholesale ($740,000).