Finding Gold in Discarded PCs

Only about 10% of obsolete computers, cellphones and other electronic gadgets are recycled, industry analysts say, with the vast majority either collecting dust or leaching toxins into landfills.

It’s a growing environmental problem, and Newmarket IT sees a huge business opportunity.

The Austin, Texas-based private company said Tuesday that it had won $50 million in funding from private equity firm Catterton Partners to help it expand in the computer-recycling market -- which founder and Chief Executive Jeff Zeigler says is a $1.5-billion business that’s growing 45% annually.

The International Assn. of Electronics Recyclers, an industry group, estimates that there are about 400 mostly small companies in the U.S. electronics recycling business.

“Our biggest challenge right now is market awareness for our industry and our services,” Zeigler said.

That market is shifting, and demand for larger-scale services is expected to soar as states and municipalities regulate the disposal of so-called e-waste.

At the same time, major manufacturers including Apple Computer Inc. and Dell Inc. have launched recycling initiatives. Much of the work is outsourced to companies such as Newmarket, which has contracts with Dell and other manufacturers.

Newmarket began in 1999 as a computer leasing company. But the focus switched to recycling during the dot-com bust.

The company now fixes and wipes clean used equipment from corporations and resells it, mainly to corporate customers.

Aging or broken systems are disassembled for spare parts or their raw materials at plants in Richmond, Va., and a former Dell manufacturing facility in Austin.

Newmarket said it would use some of the $50 million in funding to open facilities in Reno and in the Midwest this year.

For now, Newmarket handles PCs, servers and peripherals such as monitors. It wants to expand into more consumer-oriented products, including cellphones and game consoles.

But even with companies such as Newmarket, there’s a long way to go in an industry in which far more systems are built than recycled.

Newmarket can process about 1.3 million machines a year at its Austin facility, Zeigler said.

Nearby Dell shipped 37 million PCs in its last fiscal year, a spokeswoman said.

“There’s a huge gulf between units coming in and units coming out,” Zeigler said. “It’s a huge opportunity.”