Dicker Data and Apple have agreed not to continue with a multi-million dollar distribution partnership that Dicker inherited through its recent acquisition of Express Data and Express Online.
However, in good news for the distributor, Dicker Data chairman and CEO, David Dicker, said partner deals with fellow ICT giants Cisco, HP and Microsoft had been renegotiated and were "over the line".
"Most contracts have a clause written in that says that the contract expires in the case of an acquisition," Dicker said. "I'm happy to say Cisco is okay. Cisco was the raison d'étre for the whole deal. Cisco represented 50 per cent of the deal. HP is good and Microsoft is across the line."
Dicker that the company decided not to carry on the partnership with Apple after looking at the figures and concluding that it would lose money to do so. Apple has a gross margin of four per cent and that was not a "viable deal".
He said currently the margin Apple was returning through Express Online was under that.
Dicker said that Apple required a $20 million bank guarantee for the deal to go ahead and Dicker could not get that guarantee. If it could have then it might have got Dicker closer to going ahead with the partnership.
"You need the guarantee to get a credit account with Apple," Dicker said. "The guys in the US said 'we don't like the look of this, we need a bank guarantee'. We couldn't get it."
Smaller partners through Express Data and Express Online were also sticking with Dicker Data, according to Dicker.
As to the effect the Apple news would have on the market and his company, Dicker was optimistic. "It may have some psychological damage," he said. "Apple fan boys might think it's a bad decision but the sensible guys in the industry will think it's the right move.
"Some people might say 'why not go with Apple and make money with the ancillary products," he said. "My argument to that is why run with Apple? Why not just sell the ancillary products?
"Looking at the numbers though, it really was impossible to make a buck."
The $65.5 million deal to acquire 100 per cent of the issued capital of Express Data is formally completed tomorrow, April 1.
The business of integrating the two companies then starts in earnest.
"I will have two guys in residence at Express Data from tomorrow," Dicker said, agreeing that there will be job losses, however he was unable to put a figure on how many of Express Data's 400-plus staff would lose their positions.
"In a week's time, I'll be better able to tell you," he said. "But it is obvious we can't take on everybody. It's an unfortunate process and at this stage it really is impossible to say how many people will lose their job."
Apple has been contacted for comment.
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