Seneca Data-CSI Deal Creates $116M Powerhouse

Terms of the agreement between North Syracuse, N.Y.-based Seneca and Alpharetta, Ga.-based CSI weren't disclosed. However, the deal would create a $116 million custom-systems powerhouse with annual shipments of 81,126 systems, still well behind No.1 system builder Equus Computer Systems, Minneapolis, which shipped 173,500 units in 2005.

The combined Seneca-CSI will have 3,500 active VAR customers and a robust ISV customer base.

"This puts us in a very dominant position on the East Coast, making us the second-largest system builder in the country and giving us economy of scale to continue to grow the company and service our customers," said Seneca Data Senior Vice President Greg Masingill.

CSI will operate as a division of Seneca Data, according to Masingill. He said the CSI brand won't go away, but Seneca will continue to sell its Nexlink-branded systems and the CSI-branded systems.

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"This will substantially change the system builder landscape," Masingill said. "We are going to be able to bring more technical resources under one umbrella, hopefully increasing our ability to bring out more products with two strong brands: Nexlink and CSI."

So far, there has been no discussion of layoffs, but a decision is expected to be made on possible cutbacks in 60 days, Masingill said.

CSI's founder and president, Brett Berto, was unavailable for comment.

Glen Coffield, president and CEO of Cheap Guys Computers, a system builder in Orlando, Fla., said he expects more consolidation in the system builder channel among larger regional players, while smaller "mom and pop" system builders will concentrate on their core markets.

"When regional players come together, they become stronger as a whole than they were individually," Coffield said. "The problem is there's always someone bigger around the corner."

It's tougher than it has ever been before to be successful in the system builder business, Coffield added. "You have to be much more creative, and you have to negotiate harder," he said, noting that he is buying more products directly from manufacturers rather than from distributors.