Recently, PC Mall (NASDAQ:MALL) became a Microsoft (NASDAQ:MSFT) Gold Partner, the highest ranking for a reseller. Unfortunately, PC Mall's financial results have been anything but golden.
In the fourth quarter, sales fell 2% to $261.6 million, though diluted earnings per share increased from $0.11 from $0.00 in the year-ago period.
PC Mall is a rapid-response supplier of technologies to businesses, governments and consumers. The company has more than 100,000 products from top companies such as Apple (NASDAQ:AAPL), Cisco (NASDAQ:CSCO), and Hewlett-Packard (NYSE:HPQ).
PC Mall offers the usual customer distribution touchpoints, including telemarketing, the Internet, catalogs, and a direct sales force. The company also has a distribution center strategically placed next to FedEx's main hub in Memphis, Tenn.
The drop in sales partly stemmed from a budget cut for PC Mall's consumer advertising spending. The company, the largest direct marketer of Apple products, also suffered from the Mac maker's decision to move to Intel-based computers.
With lagging sales and slim margins, PC Mall is focusing hard on cost-cutting. For example, the company is pushing more work offshore, to locations such as the Philippines. It has also made major cuts in back-office operations.
Even for big companies in the direct computer sales market, such as CDW (NASDAQ:CDWC), competition can be tough. In light of Dell's (NASDAQ:DELL) success, Apple and other computer manufacturers are increasingly pursuing the discount PC maker's direct sales model.
All things considered, PC Mall is merely a small-time wholesaler, and the Internet era of megadistribution companies is brutally tough for a small firm that lacks significant scale. With only $6.3 million in the bank, PC Mall has few resources to make itself stand out. If you're an investor in this mall, expect increasingly empty parking lots.
Dell, CDW, and FedEx are Motley Fool Stock Advisor picks, while Dell and Microsoft are Motley Fool Inside Value picks.
Fool contributor Tom Taulli does not own shares mentioned in this article.
