DCS Australasia, a Victorian distributor specialising in mass storage fault tolerant technologies, entered voluntary administration on February 12 and is looking to liquidate the remainder of its assets within the month.
According to DCS owner and managing director Colin Westbury, he decided to put the company under administration after its main supplier of hard drives, Hitachi Australia, was unable to supply products over the months of October to January.
"About 80 per cent of our business was Hitachi - that took an exceptionally large part out of our cash flow and tied up all of our cash reserves," Westbury said. "It wasn't their (Hitachi's) fault, they weren't able to get products themselves out of Japan. It was a supply problem and we had a too high dependence on a particular supplier," he said.
But Hitachi Australia's general manager of sales and marketing Bernhard Kotarski said there were no supply problems. Kotarski said although the market softened from October until the end of the year, the only difficulties were with regard to overdue accounts towards the end of January.
Westbury said there was no market demand at the time for the products that Hitachi was supplying, hard drives of 1.4Gb and above. He said Hitachi stopped producing 810Mb and 1.1Gb hard drives three months before the market was ready to move.
According to Westbury, on average DCS would have normally sold about one thousand drives a month. Hitachi supplied DCS with nine hundred 1.4Gb drives in October and by the end of January there were still six hundred remaining in stock said Westbury. Hitachi was able to supply three hundred 1.1Gb hard drives which DCS sold "in about one day because we were so desperate" he said.
"There were certainly some overdue accounts, but there was no cash coming in to pay the accounts, and how are you supposed to pay your accounts if you have no product to sell?" Westbury said.
Hitachi has now appointed Dual Technologies to distribute its hard drives in Melbourne. Another DCS supplier, RAID vendor Mylex, has now signed with Alfa Computers [see story below].
All of DCS' 12 employees were retrenched and Westbury said he will continue in his role for another three to four weeks to try and sell as much stock as he can before the company is liquidated.
Westbury said he has been criticised for closing the business before it incurred debts caused by the supply problem, but said he could not continue trading. "The way the economy has been - I couldn't take that risk.
"The decision was made that the best thing to do was to close the doors there and then. My biggest concern was to make sure that the employees and creditors got as much as they possibly could out of what was left," Westbury said.
The administration is being handled by Victorian firm Carson & Mclellan.