Today PC Mall Inc announced that its wholly-owned subsidiary Sarcom Inc. has acquired Network Services plus for $7.8 million initially. NSPI has 73 employees, 53 whom are billable IT sources. All of the employees will be joining the Sarcom team except for Ted King, founder of NSPI who is retiring. As of May 31st 2010 NSPI logged revenues of $6.4 million unaudited, 75% of which were generated through service oriented business.
PC Mall stated in its press release that the company generated over $88 million in service revenue for 2009, combine this with the service revenue from NSPI and you can see that MALL’s strategy for the second half of 2010 will be a new focus on the service side of the tech industry.
PCMall.com engages in direct marketing and sale of hardware, and software, a very competitive field to be in especially with giants such as Best Buy, Amazon, New Egg and Tiger Direct in the same space. Shopping online always results in a week long price hunt, at least for me, and often consumers are not loyal to any one single website, whichever offers the cheapest price, combined with shipping payment methods and reliability gets the sale. That said, this industry is very hard to stay afloat in when considering the scalability of the aforementioned retail giants.
Engaging in the service industry will diversify revenue stream and increase recurring revenue. With IT services, reliability and helpfulness are key. Many companies have outsourced their support services, frustrating American’s with electronic problems. If you ever have had to call DELL or Microsoft, you feel my pain. Establishing a good IT program will give PCMall a niche in which it can attract clients and keep them coming back for more
Currently, PC Mall Inc. is trading at $4.54 with no premarket volume. The company has been decreasing over the past year, but this acquisition could be a turning point for the company depending on investor reactions and revenue traction moving ahead into the next quarter.
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Disclosure: no positions