By Brian White Olivetti, one of the last great names in European PC manufacturing, is again up for sale, after its latest incarnation ended in the hands of the receivers. With production at a halt, related distribution companies in the UK, France and Germany have all folded due to lack of supplies. A batch of […]
By Brian White
Olivetti, one of the last great names in European PC manufacturing, is again up for sale, after its latest incarnation ended in the hands of the receivers. With production at a halt, related distribution companies in the UK, France and Germany have all folded due to lack of supplies. A batch of potential saviors are now eyeing the assets of Olivetti’s computer business, which as recently as 1995/96 produced more than 900,000 machines, had revenues approaching the $1bn mark and employed 800 staff in its manufacturing and R&D operations.
The problems of Olivetti’s PC and server business have a long history and the drain on its parent’s finances led to it being sold to a group headed by London-based financier Edward Gottesman in 1997 when the company became Olivetti Computer Worldwide (OCW).
This effort to turn the operation round failed and earlier this year it was the subject of an MBO when it became Eurocomputer. Though it merely leased the assets and the name, Eurocomputer’s bid to make a go of the company has also ended in financial ignominy and the company is again up for sale.
The irony is that, in an increasingly commoditized business, Olivetti has a loyal customer base in Europe, and an official in Italy said it was faced with a flood of queries from potential customers asking when it could resume supplies. OCW UK Ltd, which went into liquidation this week, said that it had won several major orders last year worth more than 30m pounds ($48.3m) that would have doubled revenue this year.
There are two explanations as to why Olivetti could not make a success of the business. Those close to the company insist that ever since it was spun out of the Olivetti group, it never had sufficient capital to make the operation a success. The company has up-to-date production facilities, is equipped with a SAP ERP system and simply needs an injection of cash to make it a success.
Skeptics however, suggest that its cost base is too high to compete in an era when even vast operations such as Compaq struggle to hold their own against industry giant Dell Computer Corp. Olivetti had cut back production to the 500,000/year level as it moved out of the low-end into the professional market, but even this failed to save the operation.
The best precedent for Olivetti is Tulip Computers NV, the Hertogenbosch, Netherlands PC manufacturer, which went bust last year. As part of its rescue operation, its production line was handed over to Ingram Micro Inc and, while still engaged in R&D, the main activity of Tulip is now as a systems integrator.