Warehouse sale

The auction of the IT kit frozen in the facilities of SMB Computer when it was shut down and sealed off by the authorities last year will grab the attention of a few channel wheelers and dealers. However, it could well be the subsequent sale of SMB Computer’s Jebel Ali warehouse that sparks the most interest.

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By  Stuart Wilson Published  July 13, 2005

The auction of the IT kit frozen in the facilities of SMB Computer when it was shut down and sealed off by the authorities last year will grab the attention of a few channel wheelers and dealers. However, it could well be the subsequent sale of SMB Computer’s Jebel Ali warehouse that sparks the most interest.

The Peripherals Gulf warehouse at Jebel Ali, which was part of the SMB Computer Group, is a significant IT distribution facility — 20,000 square feet according to one vendor. The opportunity to purchase a ready-to-go warehouse at Jebel Ali is bound to attract the attention of some major channel players.

Obtaining land and building facilities at Jebel Ali has become a difficult and expensive task for many companies hoping to set up operations at the free zone. Waiting lists and spiralling construction costs are just some of the stories emanating from IT companies looking to launch or expand facilities.

The Peripherals Gulf warehouse will be sold off separately to the stock auction according to channel sources. When it happens, expect a queue of potential bidders to line up and make an offer.

Quite why it has taken so long to sell off SMB’s stock, and why it took so long to get the process going, are also interesting topics — especially for the vendors with sizeable amounts of kit up for grabs in the auction process. This kit has now been depreciating for well over a year.

The word on the street is that thousands of inkjet printers from the likes of Epson and HP will be unleashed on the market through the auction. There will also be a significant number of laptops from major brands such as Acer and Fujitsu Siemens also entering the regional channel.

There are some issues that need to be considered here. Typically when these products are sold onto distributors by vendors, there is often a 14-month vendor warranty period attached — the theory being that product will take two months to work its way through the channel to the end users meaning that the product will have one year's warranty in place.

Since these products have now been sitting in SMB’s facilities gathering dust for almost a year-and-a-half, the products that do come out will not only be outdated but also will not necessarily have a valid warranty. Most vendors with products sitting inside SMB’s warehouse reckon that the bulk of the stock auctioned off will eventually be re-exported to Africa.

Few are worried about the potential impact on their current market pricing policies should the products enter the market at a low price. Epson actually took legal action after the collapse of SMB Computer to ‘block’ its products, meaning that the proceeds from the sale of its products involved in the auction will be allocated to the vendor immediately. Any debts outstanding after the proceeds of the Epson kit sale have been allocated to the vendor will come from the overall kitty.

As is the norm in a liquidation process, SMB Computer’s creditors will have filed their claims and the proceeds from the auction will be shared out accordingly. Vendors are confident that they will obtain the full amount they are owed through the liquidation of the stock and the sale of facilities coupled with the capital that existed within SMB Computer at the time of its closure.

While SMB Computer’s stock and warehouse are up for grabs, the company's Dubai-based offices and Computer Street showroom will return to the respective building landlords and be rented out again. Traders on Computer Street have faced significant rent increases recently, with some companies citing that annual showroom and office rents have soared 40% year-on-year.

Given the slim margins that many of these companies operate on, factoring in this substantial increase in operating costs needs to be assessed carefully when developing business plans for the year ahead.

Those that have seen full details of the SMB inventory up for grabs in the auction confirm that no nuclear centrifuge parts are listed.

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