Going, going ... retailer plans big auction for small computers.

Going, going . . . Retailer plans big auction for small computers

Amid industry turmoil and a deep slump in retail prices, Torrance-based ComputerLand InfoSystems has bought and merged with rival firms this year to become the largest local dealer of computer equipment.

A mountain of captured inventory remains. With retail prices down some 35 percent from last year, the 9-year-old company plans its first-ever "liquidation" plan for more than $1 million of personal-computer gear - an auction.

The no-minimum-bid affair, which its promoters say may well be the largest auction of computers in Southern California history, is more testament to industry consolidation and a product glut.

"We thought this was the best way to sort of flush out the system," said co-owner Asif Hudani. He said the carrying costs, advertising expenses and delays all will be avoided in favor of a one-time fee to Champion Auctioneers of Orange County. Goods will range from an IBM System 36 with a list price of $120,000 to software games for children.

Such auctions may be good news to business buyers but a disappointing move to rival retailers who hope to keep price stability.

They make up a highly competitive retail segment in the Southland. Last year, the top 25 retailers reported more than $650 in sales last year.

In less than two years ComputerLand InfoSystems vaulted to the top from the No. 11 position in Los Angeles County, according to The List of largest computer retailers published by the Business Journal. About 95 percent of its business is with corporations and government agencies.

But being No. 1 does not guarantee continuing success. Giant retailer Businessland reeled from poor sales in recent years and was purchased by JWP this summer, one of a string of rocky retail consolidations.

ComputerLand InfoSystems, having bought out six L.A.-area branch offices of Nynex Business Centers and Inter-link Technologies, is doing sales at a $120-million-a-year rate, said company Vice President of Operations Greg Goeser. Most of those sales are in L.A. County. Last year's $58 million in L.A. sales trailed leader Sun Computers Inc. of Carson, with $63 million.

Hudani claimed his company would turn a profit, as it has every year since 1985. He said pre-tax net income would exceed the industry standard of 2 percent to 6 percent of sales.

ComputerLand InfoSystems hasn't joined the teeming swap-meet circuit in the county. The auction was necessary, said Goeser: "With our increased volume, I need the space for the absolute newest products. You'd be surprised how much $1 million inventory is, in terms of space."

ComputerLand InfoSystems is the biggest reseller of IBM computers, which are selling at about 40 percent off list price, said Goeser.

The Business Journal last week surveyed retailers on prices for a big seller - the IBM-compatible computer system with a 386-model microprocessor and standard memory capabilities. It sold at roughly $1,300, down from about $1,800 last year.

Across the board, personal computer equipment has fallen some 33 percent to 40 percent, according to James Brill, chief financial officer for giant computer wholesaler Merisel Inc. Prices are down further for certain products, like laser printers, which have "come of age," he said. Eager consumer acceptance, plus high-gear factory strategies, put the formerly high-end printers in reach of most buyers.

Merisel, the $1-billion-in-sales distributor, seems to be weathering the equipment glut today, because its costs have fallen as manufacturers slashed prices for many lines that are not the absolute latest.

Brill said Merisel's margin on gross sales was 9.9 percent last quarter, the same as in three of the last four quarters.

But for buyers, even small-timers, the pickings are good. Encino businessman Mel Platman said the six computers he bought last year for $2,500 each this year sell for $1,400 each. He bought three more. Platman, chairman of International Trade Systems Inc., said if he had envisioned the free-fall, he still wouldn't have delayed purchases. "If you need them, you need them," said Platman, who develops software for customs brokers and other trade professionals who use his on-line ATC Business Systems computer service.

PC clones with the popular 386 chip have fallen in price for several reasons, said Steve Bass, president of a Pasadena IBM users group:

* Intel Corp. has been lowering its 386 chip prices because of competition from Advanced Micro Devices. AMD began distributing its own AM386 earlier this year after winning a significant court battle that Intel had brought to halt AMD's incursion.

* Asian video monitor makers are dumping their computer screens here.

* Dell, Swan, Northgate and other PC clone manufacturers have been feeling the recession and lowering prices.

* PC clone retailers have been cutting prices too in response to the recession. ComputerLand InfoSystems closed the offices it took over in Costa Mesa and Torrance and continued running shops in downtown L.A., Encino, Pasadena and Tustin.

Goeser said some used equipment and furniture will also be auctioned.

PHOTO : No minimum bids: Goeser in Torrance warehouse with auction merchandise