Computers to go.

Compu-D International's colorful band of telephone salespeople taps into public's surging demand for bargain-priced computers

VAN NUYS - On busy Van Nuys Boulevard near Vanowen Street, just down from Mom's Donuts and Casa de Cadillac, is a blue two-story building with a slightly dilapidated look.

The front windows are smudged over, and the doors are locked and slightly rusted out. But go around to the rear entrance, past an airport-style metal detector and up a flight of industrial gray carpeted stairs, and you enter another realm.

It's a place where squawks of Tagalog, Farsi and Spanish mix with ringing telephones and the whine of laser printers in a hectic din.

There at the center of 40-plus employees sitting and standing around desks circled wagon train-style is Mike Dardashti, the 34-year-old, four-foot-nothing, Iranian-Jewish founder, president and CEO of Compu-D International Inc., a direct marketer of computer equipment.

In jeans and an Animaniacs denim shirt, curly, shoulder length hair and a scowl, Dardashti is a blur. He yells a lot. When he's not darting from desk to desk, a steady stream of workers come to him to get purchase and shipment orders signed, to ask advice on price negotiations or to let him know of their latest sales coup or loss.

"I'm terrific," he says, explaining his company's success. "I don't delegate a lot of responsibility. If you delegate and the other person screws up, where are you?"

Since he founded Compu-D in 1990, the company's sales have grown from less than $10 million in the first year of operations to $60 million in 1996.

"A fancy office is not necessary," Dardashti said of his modest surroundings. "We deal in telephone sales. I don't have to show somebody a good time or entertain them here."

Compu-D makes its money two ways: selling current model computers and software through magazine ads - at prices 5 percent to 20 percent below retail - and selling older machines nobody else wants to handle.

The new equipment comes from wholesalers representing Apple Computer Inc., Compaq Computer Corp., IBM, Toshiba Corp. and Texas Instruments. Those machines, which the firm sells to both individuals and organizations, account for about half of the company's revenue. Hospitals, small businesses and government agencies regularly purchase systems from Compu-D, Dardashti said.

But like a computer-specific Pic 'n' Save, the company also buys new but discontinued computers from a category of purchasers known as aggregators, on what Dardashti describes as "the grey market." They are then resold at bargain basement prices.

Like a new car that drops in value as soon as it leaves the dealer's lot, a new computer is guaranteed to be outdated within a matter of weeks.

"Only with computers it's two to three times more exaggerated," he said.

Discontinued models and factory refurbished machines sell for up to 40 percent below their original sticker price, Dardashti said, and usually still carry the full manufacturer's warranty.

A growing niche for Compu-D within this category is sales of outdated computers to Third World countries, Dardashti said.

Dardashti said sales to dealers in countries like Nigeria, Mexico, Russia and Israel accounted for about 10 percent of the company's revenue last year.

Much of the company's budget goes to ads in national computer magazines like Macworld and PC World. The firm relies on resulting telephone inquiries for the bulk of its sales.

Because the customers call them, Dardashti pays his sales team below industry standards on their commission, he said.

"But there's a lot of advantages for them. They don't have to (aggressively) sell" or make cold calls, he explained.

When a sale is made, the equipment is shipped out of a nearby warehouse where both the new and end-of-the-line inventory is stored. Because of the fast depreciation of computers, the inventory must turn over every few weeks for the firm to remain profitable Dardashti said.

"If a product is here more than a month we're going to lose money on it," he said.

Though smaller than many of its competitors - including Torrance-based Creative Computers Inc., which had $420 million in sales in 1995 Compu-D's growth rate is among the top in the computer direct marketing industry, according to Thomas Courtney, an analyst at Montgomery Securities.

"They've had about 41 percent annual growth, and that's pretty rapid," Courtney said. Other direct marketers of computer equipment are seeing 30-40 percent annual growth.

Dardashti said he expects to expand the business further in the coming year. "We're looking for more sales people, we're looking for more partners. We've got big eyes," he said.

Spotlight

Year founded: 1990

Core business: Direct marketing of new and discontinued computer equipment

Employees in 1992: 26

Employees in 1997: 46

Sales in 1992: $15 million

Sales in 1996: $60 million

Top executive: Mike Dardashti, president and CEO

Goal: To expand sales and reorganize sales staff into functional divisions

Driving force: To earn a growing share of national computer equipment sales