‘Dysfunctional’ Ideal makes profit

Ideal Hardware has lost its MD, Ronan MacDonald, in a massive restructure after top execs became distracted from the distribution business. The Surrey-based company told journalists that critical errors of judgement had been made at board level earlier this year. The operational board of nine people was dumped yesterday in favour of an executive board of five. Freshly appointed Ideal CEO Ian French will lead the team of Alex Tatham, Simon Miesegaes, Steve Lundy and Gordon Milner. Kevin Harper resigned from the board of Ideal as well as InterX, Ideal's parent company, yesterday. French described Ideal as: "Top heavy and bottom heavy, with not enough good stuff in the middle", something he planned to counter by the re-jig. An initial review began two months ago, accelerated by dismal margins in May, said French. The corporate reseller sales team saw margins fall to around six per cent, half of the usual 12-13 per cent. In addition, Ideal's recent deal with Compaq blossomed quicker than expected, swallowing enormous amounts of resources. At the time, InterX was concentrating on its Internet project, the IT Network, and the distribution side of the business failed to keep pace with changes in the industry. "Then a meat cleaver came in May -– there was nothing in the pipeline," said French. He described the current market as soft, but said the problem lay with Ideal. "It was compounded by the channel, but we have taken it on the chin." "Distribution will not die. But distribution in its current form is now over," he added. More communication between Ideal and the IT Network will ensure the company will hold up better than its rivals, according to French. "We are in better shape now to cope with what's coming than the rest of the distributors in the UK. They are not flexible to enough, partly because of their size." "Even though we were dysfunctional and disorganised, we are still making a profit." Ideal will stop selling products borderline in profit, and French believes pure commodity products will find a different route to market. He declined to comment on redundancies, yesterday described as "substantial", but said a compulsory redundancy package looked probable. InterX's share price halved yesterday to 237.5 pence, from 437.5 pence, after the company issued a profit warning. Share prices were down 20 pence at 3pm today to 217.5 pence. Alistair Laidlaw, IT Network MD, said Ideal would become a smaller part of InterX's overall business, with the IT Network and services company Unisolve growing in significance. ®