Comdisco Inc, the world’s biggest free-standing computer leasing company, wants to make it clear it doesn’t lease dinosaurs, the Rosemont, Illinois company told the Wall treet Journal. Comdisco is one of the companies most exposed by IBM Corp’s owning up that the mainframe market is moribund and unlikely ever to recover its former vigour – […]
Comdisco Inc, the world’s biggest free-standing computer leasing company, wants to make it clear it doesn’t lease dinosaurs, the Rosemont, Illinois company told the Wall treet Journal. Comdisco is one of the companies most exposed by IBM Corp’s owning up that the mainframe market is moribund and unlikely ever to recover its former vigour – but it has been adjusting its affairs on that assumption for some time, and in the latest fiscal year, mainframes – including Digital Equipment Corp superminis as well as IBM and plug-compatible machines, declined as a percentage of Comdisco’s leasing revenue to just 30%, from 60% five years ago. Problem is that for Comdisco, just as for IBM, mainframes have always been disproportionately profitable. In reaction to the flight from the mainframe, the company has accelerated a diversification of its lease portfolio to a mix more reflective of what our customers are doing, says chairman and president Ken Pontikes, himself an IBM alumnus, and one that some influential people would like to see succeed John Akers to the top job at IBM. Comdisco now leases medical equipment, personal computers and networking systems, communications equipment, and point-of-sale terminals and systems as well as mainframes, which Pontikes maintains will still play an important, albeit smaller, role for the rest of the decade. The company says its mainframe levels are flat or growing slowly, but they aren’t in any danger of plummeting, and stresses in the annual report that the company has retained historical profit margins on its leases. We have never attempted to ‘buy’ market share, nor will we in the future, he wrote, in a sideways swipe at IBM Credit’s push for an expanded share. But, just as it is for IBM, the transformation has been painful for Comdisco, which last year cut its workforce by about 10%, most of the lay-offs being accounted for by the loss of 200 jobs in its customer support division and a re-aligning of sales operations to serve the changing market. The share price has been under pressure not only from the effect on its profits but also from the aggressive litigation launched against it by IBM. But if IBM thinks that Comdisco is about to roll over and play dead in face of its battalians of lawyers with bayonets drawn, it will be disappointed: Comdisco, which denies it has done anything wrong, and claims the move is a bid to restrict competition, last year took a $20m charge to build a legal war chest, making it clear it will defend itself to the hilt.