1941 Ringwood Avenue
Company Perspectives:
Bell Microproducts' mission is to generate exceptional value for our shareholders, customers, vendor partners, and employees by continually increasing our position, and the depth of this position, as the leader in storage distribution. This growth, over the years, and in this challenging market environment, is a clear sign that we are making progress in the implementation of our strategic plan initiatives. We have expanded, and are continuing to expand and refine our portfolio of products and business offerings, enhancing our range of services and solutions.
Bell Microproducts Inc. is a distributor of computer components and value-added services. Bell Micro carries more than 150 brand name product lines, distributing disk drives, semiconductors, panel displays, and a host of other computer products and peripherals, but the company focuses on storage products and semiconductors, storage products in particular. The company's "storage-centric" product mix is complemented by a services segment that provides system design, integration, installation, and maintenance services to its commercial and industrial customers. The company also distributes two proprietary brands, its Rorke Data storage products and its Markvision memory modules. Bell Micro operates domestically and internationally, distributing its products to original equipment manufacturers (OEMs), value-added resellers (VARs), and contract electronic manufacturing services (EMS) customers in North America, Latin America, and Europe.
Origins
W. Donald Bell spent more than 20 years working in the electronics industry before he founded his own company. Bell served as a senior executive at several companies during his career, including Texas Instruments, American Microsystems, and Electronic Arrays. He reached the summit of the executive management ranks after distinguishing himself at a company named Kierulff Electronics. Bell joined the company in 1980, hired as an executive vice-president. The following year, he was named president of Kierulff. Bell spent five years in charge of the electronics company before the directors of Kierulff's parent company, Ducommun Inc., promoted him to the posts of president and chief operating officer of Ducommun. Bell occupied his new office in early 1986, but held onto his executive titles for little more than a year. In April 1987, Bell was fired after butting heads with Ducommun's chairman, Wallace Booth. Bell and Booth, according to the business press, clashed over policy differences.
After decades of working for others, Bell decided to start his own company following his departure from Ducommun. Before the end of 1987, he incorporated Bell Micro, financing the venture with his own money, investments from private individuals, and an unspecified line of bank credit. To help him start the company, Bell enlisted the services of two former Kierulff executives, Gary Bickers and Gary Cebrian. Bickers, who was fired one month after Bell, had served as regional vice-president at Kierulff. Bell appointed him vice-president of field operations at his new company. Cebrian, who had served as corporate marketing manager at Kierulff, was appointed as Bell Micro's operations manager.
When Bell's business began operating at the start of 1988, Bell Micro represented the newest entrant in the electronics distribution business. A 20,000-square-foot headquarters facility was established in Milpitas, California, near San Jose. The complex served as the company's stocking hub. Within a month, an office was opened just south of Los Angeles, in Fountain Valley, California, the first step toward completing Bell's expansion plan. "We're building a nationwide distribution company," Bell announced in a January 25, 1988 interview with Electronic News. "We plan to expand into two or three other locations in the central United States and the East Coast in 1988," he added.
Bell's original business plan was based on fulfilling a need other distributors left unfulfilled. He believed that semiconductors manufactured in Asia were underrepresented in the United States. Bell intended to focus on selling such products to OEMs and VARs in the United States, signing agreements with three Asian manufacturers, NEC Microelectronics, the Sony Components Products division, and Oki Semiconductor, within his first month in business. Aside from semiconductors, Bell Micro distributed disk drives, printers, terminals, and personal computers, but Bell, from the start, was inclined to limit the breadth of the goods he sold. "In the beginning," he said in his January 25, 1988 interview with Electronic News, "we'll have 10 to 15 product lines. We'll never have more than 25 product lines." (Bell Micro eventually distributed more than five times the limit Bell set in 1988, but one of the hallmarks of the company's success nearly 20 years later was its emphasis on depth rather than breadth in its product lines.)
Bell Micro in the Early 1990s
In comparison to later years, Bell Micro's expansion during the late 1980s and early 1990s occurred at a moderate pace. The company did manage, however, to establish a presence from coast to coast during its first five years in business, an anniversary that was marked by its initial public offering (IPO) of stock. When the public was first offered the opportunity to invest in Bell's business strategy in 1993, Bell Micro was beginning to record the impressive financial growth that later galvanized Wall Street. The company generated $65 million in sales in 1992 before nearly doubling its revenue to $125 million in 1993. Bell Micro by this point ranked as the 14th largest distributor in the nation, a standing that Bell was intent on improving. As he had articulated at the inception of the company, Bell wanted to create a nationwide distribution company. His primary means of achieving his goal was by acquiring other distributors, a strategy employed not long after the company's IPO.
By the time of Bell Micro's IPO, the company had offices stretching from California to New Jersey, but it was far from being a true nationwide enterprise. There were many markets that Bell Micro had yet to penetrate, and the acquisition of other distributors presented Bell with the most expedient way of fleshing out his company's national presence. After acquiring a personal computer reseller named LMB Microcomputers, Bell signed an agreement in February 1994 to purchase a Clifton, New Jersey-based distributor named Vantage Components for $13 million. At this point, Bell Micro had three facilities in California supported by other satellite offices in Seattle; Dallas; Minneapolis; Wilmington, Massachusetts; Chantilly, Virginia; and Parsippany, New Jersey. The acquisition of Vantage helped Bell significantly expand his presence in New England and New Jersey and give him entry into markets in Long Island, Florida, and Maryland. Vantage, with $33 million in sales in 1993, operated in Clifton; Billerica, Massachusetts; Columbia, Maryland; Smithtown, New York; and Fort Lauderdale, Florida. Bell commented on the importance of the Vantage purchase, explaining its contribution to the execution of Bell Micro's growth strategy in a February 7, 1994 interview with Electronic News. "The acquisition of Vantage is part of our strategy to expand our products and services offering to customers throughout the United States," he said. "The synergy to be realized by this combination will enable us to make significant progress toward achieving a Bell Microproducts goal of cracking into the top 10 list of electronic distributors by the end of 1995."
After purchasing Advantage, Bell waited four years before completing another acquisition. The hiatus from acquisitive activity did not mean Bell Micro's growth stagnated, however. The company grew enormously during the mid-1990s. By 1997, Bell Micro was generating $533 million in revenue, having more than quadrupled its sales volume in the three years since the Vantage acquisition. The company's chief financial officer, Bruce Jaffe, commented on the feverish growth of the company during Bell Micro's tenth anniversary when the financial results were released to the public. In a September 28, 1998 interview with Computer Reseller News, Jaffe remarked, "We went from nothing to half a billion dollars in sales in 10 years. With a good mix of organic and external growth, we expect to get to a billion dollars quicker than it took to get to half a billion."
Rapid Expansion in the Late 1990s
Jaffe's comments were made at a crucial stage in Bell Micro's development. The computer industry, and by extension the distribution industry that it served, was experiencing phenomenal growth by the late 1990s. The popularity of personal computers combined with the widespread embrace of the Internet, the emergence of e-commerce, and the proliferation of computer networking in the business place, ignited the growth of the electronics industry and exponentially increased the amount of data used in commercial and industrial sectors. In response, Bell sharpened his company's focus on carrying storage products, making Bell Micro what company officials referred to as a "storage-centric" distributor.
The billions of dollars to be made in the distribution of computers and peripherals during the late 1990s forced the industry to consolidate. As big companies acquired medium-sized companies and medium-sized companies acquired small companies, Bell found himself at a crossroads in 1998. He paused, deciding whether to acquire or be acquired, realizing that if he pressed forward there would be no turning back. This was the critical juncture of Bell Micro's development, which coincided with the company's tenth anniversary. Bell decided to make Bell Micro one of the industry's consolidators, a decision that touched off an ambitious acquisition spree and fueled Jaffe's belief that the company would reach $1 billion in sales faster than it had reached $500 million.
Bell Micro's expansion drive saw it flesh out its presence domestically and establish itself as a multinational company. The acquisition campaign began in the fall of 1998, when the company purchased the computer product division of Almo Corp., which distributed disk drives, monitors, and other computer components. The acquisition, the first since 1994, strengthened the company's presence in the midwestern and eastern United States. Before the end of the year, the company
Bell's expansion spree continued in 2001, pushing Bell Micro's sales beyond the $2 billion mark only two years after the company had eclipsed $1 billion in sales. During the year, the company acquired TTP Group, a company based in The Netherlands with offices in several European countries. The company's Canadian operations were bolstered by the purchase of Forefront Graphics and its domestic operations were strengthened by the acquisition of Total Tec Systems, which operated in the eastern and southern United States. Bell also expanded through internal means during 2001, complementing the gains made by purchasing other companies. A technology center was opened in Montgomery, Alabama, during the year, while sales offices were established overseas in Belgium, France, Germany, Italy, Sweden, and The Netherlands.
After four years of frenzy, Bell Micro's acquisition campaign halted in 2002. The company spent much of the year completing a sweeping reorganization plan aimed at improving its service to its core geographies in the Americas and Europe. The company announced in 2002 that it was considering entering Asia in 2003, but economic conditions kept the company from following through on its plans. In October 2003, Bell Micro acquired EBM Mayorista, a Merida, Mexico-based distributor of computer hardware and software. The completion of the acquisition hinted that the company might be resuming its acquisition campaign, but no further purchases immediately followed the EBM deal.
As Bell Micro completed its first 15 years of business and planned for the future, there was justifiable cause for celebration. Within a decade, the company grew from a $65 million-in-sales company to an international force generating more than $2 billion in annual revenues. The business press hailed the company for its sharp focus on distributing storage products, a focus that the founder intended to keep as he endeavored to increase his company's stature both through internal and external means.
Principal Subsidiaries: Bell Microproducts Canada Inc.; Tenex Data ULC (Canada); Future Tech, Inc.; Don Bell Microproducts Chile, S.A.; Bell Microproducts do Brasil, Ltda. (Brazil); Bell Microproducts Mexico S.A. de C.V.; Rorke Data, Inc.; Bell Microproducts Europe Inc.; Bell Microproducts Europe Partners C.V. (Netherlands); Bell Microproducts Europe Limited (U.K.); Ideal Hardware Limited (U.K.); Bell Microproducts Europe Export Limited (U.K.); Unifund Limited (U.K.); Ideal UniSolve Limited (U.K.); Bell Microproducts Solutions B.V. (Netherlands); Bell Microproducts Solutions N.V. (Belgium); Bell Microproducts Solutions GmbH (Germany); Bell Microproducts Solutions GmbH (Austria); Bell Microproducts B.V. (Netherlands); Rorke Data Italy s.r.l.; Bell Microproducts SARL (France); Bell Microproducts GmbH (Germany); Bell Microproducts s.r.l. (Italy); Bell Microproducts AB (Sweden); Bell Microproducts BVBA (Belgium); Bell Microproducts ApS (Denmark); Bell Microproducts Limited (U.K.); Total Tec Systems, Inc.
Principal Competitors: Arrow Electronics, Inc.; Avnet, Inc.; Ingram Micro Inc.; Tech Data Corporation.
Comment about this article, ask questions, or add new information about this topic: