Elcom opts to keep e-commerce arm

Elcom International has abandoned plans to spin off its e-commerce arm as a separate company and will instead absorb it back into the main business as part of a $12 million restructuring programme.

Blaming market conditions for the decision, the US-based reseller revealed that the Elcom Systems subsidiary will now be integrated into the Elcom Services Group, the company's PC remarketing and professional services operation which forms the bulk of Elcom's business.

Elcom Services is undergoing restructuring in the US and the total cost of the consolidation is expected to be about $12 million.

Kevin Thackrah, joint managing director of Elcom UK, said: 'Elcom Systems was originally set up to operate on a standalone basis, but given current market conditions, this is no longer appropriate. We don't want to run duplicate costs so the company has taken the view that it should be folded into the services division.'

At the same time, Elcom International said it anticipated losses of about $2.5 million for the third quarter to 30 September, which includes expected Elcom Systems losses of $1.5 million. Thackrah said improved revenues for the quarter of about $195 million were 'slightly encouraging,' adding that the company expected to be profitable again in the fourth quarter.

The decision not to float Elcom Systems comes less than a month after the reseller announced it had called off its hunt for a strategic partner, an exercise that had proved fruitless after more than a year of searching (PC Dealer, 8 July 1997).

Commenting on the decision, Thackrah said: 'The issue was hanging over the company and was, without a doubt, defocusing us. We tried not to let it get to us, but something like that does affect investment decisions.'