En Pointe Technologies Inc

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EN POINTE TECHNOLOGIES INC.

Los Angeles, California-based En Pointe Technologies Inc. resells computers and related equipment manufactured by the industry's leading players, including IBM Corp., Hewlett-Packard Co., and Compaq Computer Corp. The firm's electronic catalog, known as Access Pointe, lists more than 700,000 items, including information regarding cost and availability, allowing En Pointe customers to comparison shops for computer technology at a single site. En Pointe operates with a virtual inventory, avoiding the costs associated with traditional inventories, thanks to deals with distributors who ship products to En Pointe clients. The company owns 43.5 percent of First-source Corp., an e-commerce solutions provider that builds purchasing hubs linked to distributors for businesses wanting to handle procurement via the World Wide Web. It also owns 36.7 percent of SupplyAccess Inc., an Internet-based business-to-business provider of automated procurement services for businesses seeking products and services related to information technology MRO (materials, repair, and operation).

After managing a retail personal-computer chain for several years, Pakistan native Attiazaz Din founded En Pointe in 1993. Din financed his business by mortgaging his home and emptying his savings account. When that proved inadequate, Din began charging business expenses on his American Express card. According to a May 1998 article in Success, Din had recognized that "explosive demand and rapidly changing technology were creating havoc for corporate resellers, who traditionally bought hardware on spec from manufacturers and then paid to freight it to their own warehouses until they found customers." Because computer hardware prices were decreasing at a rate of up to 40 percent annually, warehouses were filled with inventory that continually dropped in value. Believing he could use e-business technology to operate as a much more efficient reseller, Din created a "risk-free virtual warehouse" system which allowed him to search for the best possible price once an order was placed. Rather than having the factory ship merchandise to him, Din had purchases shipped directly to customers.

By 1998, sales had reached $500 million and the firm was posting a profit of $5.8 million. En Pointe conducted its initial public offering. In April, First Source International Inc. sold its online reseller unit, named firstsource.com, to En Pointe. Firstsource.com resold computers and related hardware systems via the Internet to individuals and small and mid-sized companies. Later that year, En Pointe agreed to market the wearable computers manufactured by Xybernaut Corp. and the handheld computers made by DataRover Mobile Systems. Although sales in 1999 grew 18 percent to $668 million, the firm posted a $16.6 million loss. During the year, a jury had ruled against En Pointe in a lawsuit filed by NovaQuest Systems Inc. regarding a breach of contract. Damages were estimated at $1.7 million. Also, the firm's plans to sell its integration complex in Ontario, California—established in September of 1998—had fallen through, subjecting En Pointe to additional charges.

Recognizing that the computer reselling industry was slowing, particularly in comparison to the e-business services market, En Pointe shifted its focus in mid-2000 by establishing a professional services division. The firm's system consulting services included needs assessment, new system design and existing system customization, training, and systems integration. Two new contracts were secured that year: one with the state of Minnesota and another with Los Angeles World Airports. Sales in 2000 dropped to $494.4 million, and losses grew to $19.4 million. That year, the firm also created its SupplyAccess subsidiary, which targeted Fortune 1000 clients with automated procurement of MRO products and services. Within a few months, En Pointe had reduced its stake in SupplyAccess to a minority one, a move that prompted shareholders to file a class-action lawsuit against the firm. The litigation regarded allegations that En Pointe had made misleading statements regarding the potential success of SupplyAccess.

In February of 2001, En Pointe and Web Associates Inc. jointly launched an upgraded En Pointe Web site that provided customers with a direct link to the purchasing system En Pointe uses to procure computers and related equipment. The firm posted a $1.1 million profit for the first quarter of 2001, its second consecutive quarterly profit. Some analysts point to the turnaround as an indication that En Pointe's mid-2000 restructuring was successful.