Micron Electronics to Sell MicronPC

Service, support, and sales to continue uninterrupted, executive says.

Tom Mainelli, PCWorld.com

MicronPC customers can count on continuing service, as well as current and future orders, despite an announcement today by Micron Electronics that it is selling off its computer business.

"It's business as usual," says Lyle Jordan, a MicronPC division president. In fact, MicronPC will continue to operate after its pending sale to an unnamed, privately held, information-technology investment company, Jordan says.

Current MicronPC owners will continue to receive customer and technical support, Jordan says. The company will fulfill current orders and will continue to build and sell new systems, he says. At least one industry analyst, however, is less optimistic about the company's long-term prospects.

"Short term is not a problem, but long term the company may not have the resources to weather this economic storm," says Rob Enderle, a research fellow at Giga Information Group.

Jordan and Mike Adkins, MicronPC's other division president, plan to continue leading the company's management team after its sale. Jordan says he hopes the sale will go through this summer. It's unclear whether MicronPC will retain its current name.

However, a direct result is the immediate layoff of 430 employees from various departments in MicronPC. It's part of a cost-reduction strategy to make the company more efficient and profitable, and leaves MicronPC with about 1900 employees, Jordan says. The staff cuts will not affect customer sales and services, he says.

Tough Road?

While Jordan predicts MicronPC will survive and prosper after the sale, analyst Enderle wonders whether the company will survive the current PC market slump.

It could be 12 to 18 months before the PC market recovers, and it won't be the same market when it does come back, Enderle says. Big companies such as Compaq and Hewlett-Packard have enough resources to hang on, but MicronPC likely does not.

That said, if the sale helps the management to focus on making and selling computers better and more efficiently, there is a chance MicronPC could make it through, Enderle adds.

Breaking Up the Family

Micron Electronics currently has three distinct business units: MicronPC, SpecTek, and its HostPro Web-hosting services. The company will sell its SpecTek memory unit to parent company Micron Technology. Micron Electronics' chief executive officer Joel Kocher will stay with the HostPro business, which will merge with a company named Interland, the combined businesses taking the Interland name.

The sales and merger are the result of long-term plans, Jordan says, and aren't a knee-jerk reaction to the PC market's current depressed state. Separating the units completely allows each to focus on its strengths, he says.

CEO Kocher has long maintained there is no money to be made in the PC business, suggesting that selling services for those PCs--MicronPC's focus in recent years--is the place to find profits. Jordan disagrees with that theory, and plans to make the computer company profitable again, he says.

To do that the company will continue to streamline its operation, and will branch out into new sales areas, Jordan says. While MicronPC has traditionally been a direct-seller, it will examine more indirect sales possibilities, he says. For example, MicronPC found much success in its deal with retailer Best Buy.

In some ways, MicronPC's future hardware-only incarnation may resemble the changes Gateway is going through, Enderle says. Gateway executives recently announced plans to suspend many of its profitable service businesses and focus on making hardware. Analysts aren't optimistic about that plan, he says.

MicronPC's Jordan, however, expects the change to work for his company, and is confident. "I feel great about it," he says.