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Auburn-based computer reseller Zones Inc. continues to struggle to create a profitable business model.
An acquisition made earlier this year has added to company sales and contributed some $800,000 in income. And sales are up about 10 percent so far this year, which sounds promising at first.
But a closer look reveals that Zones' acquisition, Corporate PC Source, is delivering far less in sales and profits than its past performance would have predicted. Simultaneously, shrinking sales at Zones' MacZone catalog and declining orders from major customer Microsoft Corp. have also curtailed the company's revenue growth.
In its third quarter, ended Sept 30, Zones saw sales rise to $112.7 million, up more than $10 million from the same period in 2002. For the year's first three quarters, sales were $330.4 million, up from nearly $310 million at the same point last year.
But so far this year, Zones shows a loss of $636,000, compared with a $577,000 profit at the same point in 2002.
Zones acquired Corporate PC Source in Illinois in March in a deal that included $3.7 million in cash. In 2002, PC Source reported $95.9 million in sales and $4.1 million in pretax profits.
Unfortunately, Corporate PC's performance this year isn't quite as strong. Zones reports that sales at Corporate PC in the first six months Zones has owned it were $37.3 million, where nearly $48 million would have...