CompuCom Systems Chairman, President and CEO Ed Coleman Wednesday said he expects to accelerate an expansion of the company's services business in the wake of the acquisition of CompuCom by Platinum Equity LLC.
"With Platinum's backing, we will have the opportunity to more rapidly transition our business to a services led business," said Coleman, who has been migrating CompuCom from a product reseller to a full fledged IT services company for the last three years.
Coleman said there is a "tremendous opportunity" in the services business with completion of the deal. "It is highly fragmented [services market]," he said. "As we focus more and more of our energy on what we call the mid-market opportunity--organizations with between 1,000 to 10,000 employees--we see tremendous opportunity to provide a broad array of services to those clients."
Platinum, a $5.5 billion privately held diversified technology investment firm, announced last Friday that it had acquired the $1.5 billion, 17-year old solution provider in an all cash deal valued at approximately $254 million.
Coleman maintained that the deal was a good one for CompuCom shareholders, employees and clients despite what some industry analysts privately called a relatively low price-tag for the CompuCom assets.
"Of course I think it's a good deal," said Coleman. "It's a rapidly consolidating industry. It's an opportunity for CompuCom to be acquired by an organization that views us as a platform company. It will give us the opportunity I believe to more rapidly transition to a services led business which I think will create opportunities for our associates. It will create a broader set of capabilities for our clients."
Coleman said the goal for CompuCom is to be "the premier company in helping companies plan, implement and manage industry standard computing environments."
Since Coleman took the helm of CompuCom in late 1999, the solution provider has gone from a $2.71 billion company with 5,500 employees to a $1.45 billion company with 3,400 employees. At the same time, the company's services revenues have grown from $271.5 million in 2000 to $296 million in 2003.
Coleman, however, pointed to the "great progress" in shifting CompuCom from "a product led model to a services led model as evidenced by the most recent quarter with over 25 percent of our revenue and 65 percent of our gross margin dollars coming from services."
"I think CompuCom has achieved a lot on its own," he said. "We anticipate the ability to achieve even more as a part of Platinum Equity's portfolio of companies."
Coleman said the product reselling portion of CompuCom's business has been under pressure for a number of competitive and economic reasons. "The product resale business has been under pressure from Dell," he said. "It has been under pressure from OEM direct. It has been under pressure with declining margins. It has been under pressure from the technology recession."
As for whether he has any regrets as he moves to complete the sale of CompuCom, Coleman said: "Not at all. I am very proud of what we have accomplished at CompuCom and I am looking forward to what we will accomplish as a member of the Platinum family."
Coleman, who will continue to head up CompuCom, would not comment on whether the plan is for Platinum Equity to eventually sell CompuCom once the services transition is completed.