Computer Associates (CA) has invested $50 million in CHS Electronics as part of an expanded strategic alliance between the two companies, giving rise to suggestions that the alliance was a thinly veiled attempt by CA to strengthen CHS' financial position.
CHS announced plans to lay off 10 per cent of its workforce and close warehouses after it revised fourth quarter figures (PC Dealer, 24 March).
In a statement, CA claimed it was investing the $50 million in the struggling distributor in return for being supplied with 'marketing, distribution and reseller rights'.
Peter Rigby, UK director of marketing and communications at CHS, dismissed speculation that the alliance was ostensibly to support the distributor.
'This is a follow-on from the bundling deal between the two companies that was announced at the start of May, and will see us work with CA's entire product range to penetrate the corporate market,' he said.
Adele Knox-Roberts, distribution sales manager at Microsoft, claimed Microsoft preferred to partner with distribution companies, rather than invest in them.
'If we did, there would be conflict in the channel,' she said.
James Wickes, chief executive of InterX, denied that CA's investment in CHS could undermine its strategy of generating 50 per cent of sales through the channel.
Meanwhile, Rigby said he did not expect any of the $50 million to filter through to CHS in the UK. 'It will be used for working capital. I have no idea what it will be spent on, but we have no need for any more working capital in the UK.'
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