Compaq and Businessland Heal Their Yearlong Rift
A year after a messy business squabble prompted Compaq Computer to pull its products from the shelves of Businessland retail outlets, the two companies have reconciled.
The nation’s largest computer retailer said Wednesday that it will again sell Compaq machines, one of the nation’s most popular line of personal computers that at one point accounted for 15% of Businessland’s sales.
The surprising reconciliation follows a difficult year for both companies. Businessland slipped into a sales and profit slump and late last year cut its staff by 7%. Meanwhile, Compaq’s sales and profits in 1989 failed to meet earlier expectations.
Michael Swavely, Compaq president, said the two companies patched up their relationship because the reason for the rift--Businessland’s alleged preferential treatment of International Business Machines products--had disappeared.
“Now Businessland recognizes that their customers expect them to provide all product lines on a balanced basis,” he said.
Last year, Compaq charged that IBM gave Businessland preferential pricing, and that Businessland “changed their sales compensation plan to give four to 10 times more commission (on IBM machines) than on Compaq,” according to Swavely. He said the commission structure caused the Businessland sales force to push IBM products over Compaq’s models. “These things have now all changed,” he added.
Swavely declined to provide details on the new agreement, but said “the way Businessland would state it is that they will present the top brands--Compaq and IBM--in a balanced manner to their customers.”
In a conference call with reporters, Businessland Chairman David Norman said discussions with Compaq started last year. “We have developed a relationship where we are clearly communicating at all levels at both companies,” Norman said.
Compaq products had accounted for 15%, or $150 million, of Businessland’s yearly revenue, while Businessland sales of Compaq products accounted for about 7% of the computer maker’s annual revenue in 1988.
The announcement sparked a sharp rise in Businessland’s stock, which soared $2 per share, or 22.8%, to close at $10.75 on the New York Stock Exchange. Compaq rose $3.625 to close at $92.25.
Businessland last fall began selling NCR Corp.’s machines, but analysts have been skeptical that NCR’s line of personal computers would fill the gap left by Compaq. Businessland had also struck a deal to be the sole retail distributor of the Next Computer, the new desktop machine created by Apple founder Steven P. Jobs. Although Businessland had originally projected that first year sales of Next machines would reach $100 million, sales so far have fallen far short of that mark.
Separately, Businessland announced that it has accepted the resignation of Enzo N. Torresi from its board of directors. Torresi is a co-founder of Businessland and has served the company as a director since 1982.
