Rich man, poor man, Begemann

Tulip's 100 or so active UK dealers can breathe a sigh of relief. Their supplier is back in business, 'refreshed and refinanced' following its acquisition by Dutch finance house Begemann, or so I am told. But its inability to trade for the last six weeks will have done Tulip UK incalculable damage in terms of dealer and customer relationships. There will also be calculable damage to the vendor's top line.

And the UK subsidiary appeared to be going so well. Just a week before the collapse of the parent company, marketing manager Jonothan Sultan boasted in one paper that the UK had just completed its best-ever quarter.

Sultan is confident the manufacturer will recover its position quickly.

But it is the marketer's lot to be confident.

Given the UK was on a run-rate of #25 million a year - about an eighth of group turnover - it may not have to do too much to get back on track.

With a long lease on the parent company's Dutch assembly plant assigned to Ingram, Tulip has been freed from an awful lot of overhead. The company's retrenchment to just six countries in Western Europe (Holland, UK, Belgium, Germany, France and Italy) is also to be welcomed. Other operations will be offered to local management to run as agencies for the vendor, or they will be shut down.

Prior to filing for administrative receivership in April, Tulip ran subsidiaries in 17 countries, including India and China. For a company of its size, this quest for world domination was an unaffordable folly.

Tulip has finally relinquished its ambitions to trade in the retail market.

It has had two pops at this sector, most recently last year's purchase of the Commodore brand name from the receivers. Failure to get Commodore stock into stores in time for the consumer Christmas buying decision was another factor that pushed it closer to the edge.

Tulip's investors Begemann has put the Commodore brand up for sale. Commodore is supposedly Europe's third best known PC brand, which may make it worth something to some foolhardy soul. The brand also brings bad luck to anyone who touches it.

At least now Tulip has an owner that understands the requirement of matching expenses to income. But there is some way to go before it becomes a lean, mean machine. There are 30 people at Tulip UK (36 before the collapse), which seems rather high considering the company has to divvy up margin on #25 million sales with its dealers. Tulip remains committed to its dealers, but does this make good business sense?

Tulip is a classic case of a company that should go direct. With annual sales of #200 million derived from low-margin hardware, the group is too small to maintain even six fully-staffed country subsidiaries.

A nice greenfield telesales centre in Dublin could do the trick.

Drew Cullen is a freelance IT journalist.