Micro D May Merge With Eastern Firm

Micro D Inc. of Santa Ana said Monday it is holding merger discussions with Frist Software Inc. of Lawrence, Mass., a move that could make Micro D the nation’s largest wholesaler of personal computer products.

Lorraine Mecca, Micro D’s founder, vice chairman and chief executive, said that although no papers have been signed, “there is agreement on both sides that we want to do the deal.” Mecca said that if the merger is completed, the combination of Micro D’s $114-million-per-year sales with the $60-million annual sales of First Software would create the country’s largest computer distribution company.

The proposed merger comes as sales throughout the personal, or micro, computer industry are sagging and as both manufacturing and distribution companies are starting to combine their operations to survive the tougher times.

“Consolidations, mergers and strategic alliances--those are the three key moves in the industry,” said Chris Christiansen, a personal computer analyst for the Yankee Group in Boston.

Added Robert Lefkowits, an analyst with InfoCorp in Cupertino: “You need to be a major, major player in the industry these days to survive.”

Within the last several weeks, Boston-area software publishers Lotus Development Corp. and Software Arts agreed to merge their operations. In addition, Lotus has agreed to jointly develop computer software with Cullinet Software, also located in the Boston area. In a similar vein, AST Research, an Irvine computer products maker, has announced a joint-marketing agreement with Borland International, a Northern California software manufacturer.

The latest proposed merger combines companies with complementary strengths and distribution territories. Micro D has strong sales of computer machinery in the western United States while Frist Software primarily sells computer programs in the eastern half of the nation.

National Focus Provided

Christiansen said the proposal also provides Micro D with a much-needed national focus. The company’s sales have flattened and its profits have plunged in recent months. Furthermore, he said the merger would enhance Micro D’s ability to negotiate distribution deals with software publishers who are increasingly bypassing wholesalers in favor of dealing directly with retailers and computer product users.