Consumables and printer distributor, Phoenix Toner, has denied speculation that it will shut up shop after cutting ties with tier-one vendor, HP.
General manager, Don Bentley, confirmed the distributor ended its relationship with HP but was adamant Phoenix made the decision, not the vendor.
“We have surrendered the relationship – it was a mutual agreement. We sat in several meetings and discussed this amicably and came to an agreement,” he said.
Ever-diminishing margins, along with significant mandatory stock holdings, made the relationship an unprofitable one for Phoenix, Bentley said. While HP was a significant portion of total revenue, return on investment was low, he claimed.
The pair have been working together since November 2003.
“We were holding millions of dollar in stock, and our owner didn’t want to play in that area anymore,” Bentley said. “The business didn’t want to have that amount of cash tied up in something that wasn’t profitable.”
Under the final agreement, HP has taken back all residual stock at cost price. The final consumables were being shipped back today, Bentley said.
An HP spokesperson declined to comment on Phoenix's decision but confirmed that resellers were advised of the end of the relationship on October 15. The vendor continues to distribute ink, toner and paper through authorised distributors, Ingram Micro and Synnex, the spokesperson said.
Phoenix is now focusing on remaining vendors including Brother, IBM’s InfoPrint, Kyocera, Canon, Oki, Konica Minolta and Epson.
“We’re not closing up. As I told the staff here, before we were an HP distributor we still had all the other relationships with other vendors,” Bentley added. However, he didn’t rule out a restructure of its operations and staffing.
“We will have to take a look at that moving forward – HP was a lot of volume, and we moved our warehouse to Asquith [suburb of Sydney] because of that,” Bentley said. “Without the HP products, we might consider a restructure. The good thing is we owned the premises.”