Tiny Computers = big losses
The March of Time
Tiny Computers, the UK's biggest PC builder, which collapsed on Tuesday and got bought on Wednesday, got itself into a right old mess.
The company is understood to have lost £35m last year on sales of £200m, according to the FT which carries an interview with Bill Davis, chairman of new owner Time Group.
The company increased its marketing spend last year in an attempt to reverse declining sales - but this didn't work; sales fell 40 per cent last year, according to receivers Grant Thornton.
Time is understood to have paid £1m for the stock (probably a steal), as well as assignment of shop leases, responsibility for employees and after-sales service, the FT says. It's taking on no debt - but the leases, employees and maybe the warranties, could be considered liabilities.
Time's private shareholders, in essence the Mohammed family, are financing the deal with £20m of their own money, and there are bank facilities in place, Davis told the FT. This should take care of working capital needs.
So who are the losers in the Tiny collapse? Here are some early candidates:
Intel: we assume it's a major creditor, but it can afford to take a hit. More galling is the loss of Tiny, the fifth biggest seller of PCs in the UK, as an Intel-only account. Time is the UK's biggest customer for AMD.
Fullarton Computer Industries: last year Tiny awarded FCI a contract worth £200 million over five years to build its PCs. So bad debt, and no new busines -Time makes its own PCs, and will add the Tiny brand to its assembly line.
Newspapers and computer magazines: first up will be some bad debt; second, the combined Tiny/Time spend will be less than when the two were slugging it out with each other.
Powerhouse: Time announced it was walking away from operating concessions with this electronic retail superstore chain. Tiny was supposed to take over the concessions in February. Not any more, it won't.
Tiscali: Tiscali bought Tiny's installed ISP base last year and had a deal to pre-load new PCs with its service. Time Group has its own VISP (the V stands for 'virtual') service, Supanet (not part of the company but there is common ownership). Last year, the FT carried a report to the effect that Tiscali was in talks to buy Supanet. It may be a wee bit more expensive now. ®