InaCom Corp.

» see inacom.com as it lived, on the wayback machine

~ the eulogy ~

Five months and twelve days separate the sale of InaCom's distribution business to Compaq from the press release that closed the company. The sale was 4 January 2000 and brought in $369.5 million. The press release was 16 June 2000 and was headlined, in InaCom's own capitals, FILES FOR CHAPTER 11 BANKRUPTCY PROTECTION; CLOSES SUBSTANTIALLY ALL BUSINESS OPERATIONS.

The business underneath that headline was a reseller. InaCom bought computers from manufacturers, sold them to companies, and then ran the companies' desktops for them under service contracts. It came together in 1991 when ValCom, founded in 1982 by William L. Fairfield, merged with Inacomp Computer Centers and took the shorter name. By 1997 it entered the Fortune 500 at position 436, Fairfield running it as both president and chief executive, and it stayed on the list until the year it died.

What broke it was an acquisition. On 9 October 1998 InaCom bought Vanstar, a rival reseller, for a reported $465 million to $480 million. The combined company employed close to 12,000 people and was projected to turn over $7 billion. It also issued 27.7 million new shares to Vanstar holders at a swap ratio of 0.64, which more than doubled the share count, and it inherited credits on Vanstar's balance sheet that forced InaCom to restate its 1998 results and the first three quarters of 1999. Without the restatement InaCom could not produce 1999 results or a first-quarter 2000 filing, its existing credit agreements were terminated for that reason, and the New York Stock Exchange delisted it for falling short of the listing requirements. Twenty months after the Vanstar deal, the Chapter 11 petition went in.

~ the dossier ~

~ what the filing actually says ~

The 8-K of 16 June 2000 is short and it is first-party, which is why this grave leans on it instead of on the trade coverage. Item 3 records that InaCom and several subsidiaries filed voluntary Chapter 11 petitions with the United States Bankruptcy Court for the District of Delaware, lead case number 00-2426. The press release attached as Exhibit 99.1 is datelined Atlanta even though the filing's own cover page gives the principal offices as 10802 Farnam Drive, Omaha, and the media contact on it answers a Georgia number.

Two sentences in it carry the whole story. The first: the company "has closed substantially all of its business operations" and the filing "will allow InaCom to effect an orderly cessation of operations and disposition of the Company's remaining assets." The second is the trigger. Negotiations to sell the core services business had not reached a definitive agreement, and the company "was unable to procure any further extensions of the previously disclosed waiver of certain defaults under its senior secured revolving credit facility. The waiver expired on June 15, 2000." One day later the company was gone. Substantially all of its employees were terminated effective the same day.

~ the five months in between ~

The Compaq sale was supposed to be the rescue. InaCom handed over the distribution arm and kept the services arm, intending to live off the contracts. Three days after that deal closed, on 7 January 2000, IBM severed its business partner relationship, and a reseller with no distribution and a shrinking roster of vendors is a very thin business.

Compaq was itself bought by Hewlett-Packard in 2002. The distribution business InaCom sold to stay alive therefore changed hands twice inside twenty-eight months, while the company that sold it lasted five.

~ the distance ~

You only ever met InaCom if you were signing for four hundred desktops at once. It sold to purchasing departments and then billed them monthly to keep those desktops running, which was not how anyone around me bought a computer. The nearest equivalent I knew was a shop that assembled a machine out of loose parts while you waited, with no service contract and nobody to call afterward.

inacom.com answers today with 114 bytes: one line of JavaScript that pushes the browser straight to a parking lander. Twelve thousand people once drew a salary from whatever used to sit behind that address.

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