Big PC maker closes doors

By RICHARD WOOD

A cloud hangs over the future of New Zealand's largest local manufacturer of personal computers, The PC Company, after it shut its doors yesterday.

The Hamilton-based assembler has offices in Auckland, Hamilton, Rotorua, Wellington, Nelson, Christchurch and Dunedin and has been suffering declining sales for the past year.

Customers, including those with machines in for repair, were met with signs and an automated phone message saying the firm had ceased trading.

A statement issued by managing director Colin Brown said the closure was temporary.

He hoped a restructuring would be complete by the end of the week.

He said it had been a difficult and painful decision, taken to protect the interests of stakeholders.

Mr Brown told the Herald the firm was not in receivership and neither was it insolvent. Efforts were being made to contact customers affected.



Tony Butler, managing director of leading distributor Tech Pacific, said the speed of change in the PC industry, lower prices and the strong dollar had combined to create a difficult trading environment for PC gear in New Zealand.

He said a PC, excluding monitor, had dropped in value by 50 per cent in 18 months, and 30 per cent of that was attributed to the exchange rate changes.

This was the opposite to the preceding four years, he said. The currency had devalued relative to the US dollar, which held up the price of PC gear.

Terry O'Brien, a retired engineering company executive, had his PC in for repair and was advised it would be dispatched last Wednesday, but he has yet to see the computer.

Mr O'Brien said he had difficulty getting through on the phones and getting action from voice-mail messages.

He did not understand why technical support would be shut down if the firm was carrying on.

Auckland customer Ivor Whibley, who uses his computer for freelance writing, handed the machine in for repairs two weeks ago and rang yesterday morning to see where it was.

He said he got a shock from the message that the company had ceased trading, and he was unable to contact anyone on the phone.

But an email to the firm resulted in a response from Mr Brown that the PC would be couriered yesterday, and should arrive today.

Mr Whibley said he was comforted by the response.

He said he chose The PC Company as a supplier because it had offices nationwide, suggesting the company offered superior support.

Mr Brown told the Herald in May that its core market, selling PC bundles to home PC buyers, was not viable long-term.



At that time it had closed stores in Palmerston North and Tauranga and reduced advertising, and intended to sell more to business.

Mr Brown said the firm was working through various scenarios and talking to creditors, although it had not made any arrangements with them before the announcement.

In May, he said the firm owed less than one month's turnover to suppliers and had a couple of million dollars in net equity.

John Dunbar, managing director of Ingram Micro, which distributes parts that go into PCs, said it was owed hundreds of thousands but was insured.

Greg Skinner, general manager of printer supplier Epson, said his firm was also owed money, but not a substantial amount.

He said Epson was with The PC Company from day one and there was support in the industry for Colin Brown.

"We would be more than willing to work with Colin to find a way through it."

PC Company

A year ago the PC Company was a shining light in the local industry, with 6.9 percent and was anticipating sales of over $60 million for the year.

Its troubles appear related to rapid industry changes.

Smaller stores working on lower margins and selling just 30 to 50 PCs a month to niche markets have hit firms holding more stock.