Dimension Data ponders Express Data sale

Dimension Data has refused to categorically rule out the possibility of selling off distributor Express Data after its complete acquisition of the Com Tech Group recently.

Speaking in an interview with ARN at Com Tech Forum X in Coolum on the weekend, Ettienne Reinecke, Dimension Data's group technical director of network services, said Express Data is now the multinational's only distribution company worldwide.

"It is a business model we will continue to re-evaluate," he said.

Express Data is one of Australia's leading IT distributors with revenues in excess of $500 million, competing directly with the likes of Tech Pacific and Ingram Micro.

However the new dilemma for Express Data is that while highly profitable, it does not achieve the same profit margins as its sister company Com Tech Communications due to ongoing margin pressure facing all distributors. And it's a business model JSE and LSE-listed Dimension Data has deliberately stayed away from after exiting its last distribution company in South Africa. Instead, it's chosen to seek the golden pastures of high-margin IT services provision.

"What I can say categorically is that we will not develop any more distributors around the world," he said.

Reinecke said if Express Data figures were removed from the Com Tech Group, the company's performance overall was on par with Dimension Data's expectations. "And we can live with that," he said.

In addition, Reinecke said it was more likely Express Data's business model would change in the future instead of face the sale yards.

"They've got superb systems," he commented, stating it holds an impressive 60 per cent market share in it's chosen areas of networking and software distribution.

When asked about Express Data's future, national marketing manager Peter Masters quoted former ED general manager, now Com Tech Group general manager, Jon Shein. "Everything's always for sale," he quipped, then added seriously: "The truth is we're very valuable to the Dimension Data Group."

Aside from high revenues and profits, Masters said Express Data also brings ideas and extensive channel knowledge to the group.

Meanwhile, Com Tech announced at Forum X it's taking the business into new waters by signing an agreement with communications company Love, founded by marketing whiz Siimon Reynolds.

Love will work with Com Tech to offer customers "online and offline brand management solutions", particularly when it comes to building integrated e-business Web sites.

Mark Jones travelled to Forum X as a guest of Com Tech.

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