Update: Olivetti MBO is confirmed

Shareholders in Italian vendor Olivetti Computers Worldwide (OCW) have approved the company's proposed MBO. But UK distributors believe this is just the first step, and that the company's main difficulty lies in getting the kit and confidence back into the channel. Last week, a proposal was put to shareholders that an MBO would help write off the company's L88 billion debt to the Olivetti group. See earlier story. The buyout will reduce the share of Piedmont International, which bought Olivetti in 1997, from 80 per cent to 35 per cent. A meeting was held last night, in Turin, to thrash out the details of the MBO. But even if it goes ahead smoothly, the MBO is unlikely to bring Olivetti's woes to a speedy end. Some distributors are claiming that they are completely out of many Olivetti lines. The channel is already complaining about the level of disruption to Olivetti stock. One industry source said: "There are ridiculous shortages of Olivetti kit in the channel. The lead times from Italy go between two weeks and two months. There are few spares available. It's a very poor situation." Another agreed, saying: "It's only really starting to bite now, but we're running out of product. Olivetti is putting a positive slant on this MBO, but it needs to improve its supply - and to do it quickly." Sources also felt disquiet about Olivetti losing market share due to poor product availability. Ian Davidson, Olivetti UK PC division marketing manager, admitted the company's failings, but stressed the MBO was positive news. "This will give us the much needed cashflow. The cash constraint we have been under, caused by debts to the Olivetti group, has caused these product shortages." Davidson said he expected the amount of kit in the channel to be back to capacity by the end of March. He added: "In the short term, we will have lost market share. But in the last year, we have started our reseller programme, Olivetti Pro, and this has brought us into direct contact with the channel. I see the current situation as a short-term blip, and we should recover the lost ground in Q2." ®