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Commentary: Comdisco learns to add and subtract

Norman Blake, the new chairman, president and CEO of Comdisco, takes the helm of a troubled company that has already done a great deal to straighten itself out.

By Adam Couture and Eric Goodness, Gartner Analysts

Norman Blake, the new chairman, president and CEO of Comdisco, takes the helm of a troubled company that has already done a great deal to straighten itself out.

See news story:
Comdisco names new chief executive

Comdisco is in the process of redefining itself, getting closer to its roots and getting out of businesses it shouldn't have been in to begin with.

Earlier this year, Comdisco exited managed network services--only 37 of its 5,300 customers had signed on for the service. Last year, it got out of desktop management services, which, like network management services, served fewer than 100 customers. In March 1999, Comdisco acquired a majority interest in Prism Communications, a New York-based provider of high-speed communication services, with the intention of providing low-cost communications services to its corporate customers as well as Prism's small business customers. A year and a half later, Comdisco pulled the plug on Prism as well.

Gartner believes that the managed network services announcement is just the first of a number of similar announcements Comdisco will make in 2001 as it realigns, trims or eliminates subpar services. Late last year, Nicholas Pontikes--the founder's son--stepped down as Comdisco CEO and was replaced by Phillip Hewes as president and CEO. Some analysts maintained that Pontikes had steered the company into several money-losing ventures and that Hewes was re-evaluating all Comdisco operations to determine which should be scrapped and which should be maintained.

At least initially, newly appointed CEO Blake is likely to follow the course set by Hewes. Gartner believes that the services that will make the cut will be those most closely aligned with storage and continuity services or in healthcare, the company's chosen vertical industry.

Of course, service profitability will also factor prominently into Blake's decisions regarding which businesses to keep and which to drop. For the fiscal year ended Sept. 30, 2000, the company reported all-time record earnings--from continuing operations--of $255 million. Even so, Comdisco reported an overall net loss of $67 million, much of that related to discontinuing various operations.

Clearly, Comdisco needs to divest itself of money-losing operations and concentrate on services within its core competencies with the potential to bolster the bottom line. Nonetheless, Gartner anticipates that the company will add services, as well as eliminate them.

Although Comdisco's profitability has yet to become clear, the company's announcement of managed storage services late last year is one example of a new service line well within Comdisco's core competencies. Others will certainly follow.

(For related commentary on disaster recovery and how Comdisco helped a customer when a tornado hit the customer's facilities, see registration required.)

Entire contents, Copyright ? 2001 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.