Gateway eyes PC Direct as US Office Products dithers

Gateway eyes PC Direct as US Office Products dithers

PC vendor Gateway has reportedly done due diligence on assembler's PC Direct at a time when PC Direct's parent organisation, US Office Products (USOP), appears to be in financial strife.

PC Direct is a subsidiary of Blue Star, which in turn is owned by USOP. It belongs to the Blue Star Solutions Group. However, PC Direct and another subsidiary, Ubix, are regarded by some in the industry as the weak links in the Blue Star stable.

IDC Australasia Research general manager Graham Penn confirms that Gateway executives have visited PC Direct and that they have looked at the company under due diligence.

He said, however, that it could be some time before a decision is made. "No other New Zealand PC company would have the resources to take over PC Direct, and the alternatives are few and far between. Gateway fundamentally builds in Asia and does final assembly in Australia. Any deal would turn on price. PC Direct would fit Gateway's business model but you have to ask why they would bother. However, all things have value if the price is low enough," Penn said.

PC Direct general manager David McKee-Wright wouldn't confirm the Gateway interest. He said there have been several parties interested in the organisation.

Blue Star Solutions chief executive Anthony Howard didn't respond to phone calls. Gateway's Australian managing director, Peter Lees, was traveling and not contactable.

Moody's Investors Services, meanwhile, has placed the ratings of USOP on review for possible downgrade, prompted by the fact that the organisation's short- and long-term profitability may fall short of Moody's expectations. It notes, specifically, that part of the expected shortfall in operating profits is due to the current weakness in the exchange rate for New Zealand dollars.

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