Holy Crap! Like a Zombie, CompUSA is back from the Dead

I think the title of the post has probably been all the intro I need for this. My antivirus, Microsoft Onecare, which is a thousand times better then the resource-hogging Norton, just expired. Buying another year was $50 if I downloaded it directly from Microsoft. Well, I don't know what Microsoft's stupid strategy here is (selling it at full retail price online) but I knew that CompUSA (from back when I used to work there) used to run specials on it all the time, sometimes completely free after a rebate.

So anyway, I go to CompUSA.com, and notice at the bottom, "A Division of SystemMax." After a quick Google search, I pull up the following article from 2 weeks ago. Good news here, sports fans -- "Up to 16 stores will remain open." For those of you who don't know, SystemMax is $3 billion-dollar-a-year custom computer manufacturer and owner of TigerDirect.com. (Anybody remember when TigerDirect was the coolest, before Newegg came along?)

There are many things interesting about the saga of CompUSA (other than the fact that I worked there). Owned by the richest man in Mexico, Carlos Slim, and third richest person on the planet, CompUSA is Slim's so-called "only failure" in business. As I said in my previous CompUSA article, there were many flaws and mistakes that led to the downfall of one of the greatest retailers I have ever done business with, but this latest buy-out is just sad.

While I've never been able to find good data on the original CompUSA purchase (since a private investor bought the company it doesn't have to be disclosed), but based on several articles (like this one) my personal guess is that Slim paid close to a billion dollars for CompUSA less than 8 years ago.

So after that purchase in 2000, the stores gradually started losing more and more sales, profit margins for PCs drop to almost nothing, and the company starts to tank. CompUSA decided in early 2007 to close about 60% of its stores (including the one I worked at). This was supposed to refocus the company on its most profitable stores and get them back on track. In late 2007, CompUSA announced that they were going to close the entire chain and the company was sold to a liquidating company called Gordon Brothers. The financials for that deal were not disclosed.

Now we come to Jan 2008, when System buys 16 stores and all the rights to the CompUSA name and logo, as well as their website for $30 million dollars. Keep in mind, CompUSA used to do billions in sales a year. Personally, I commend System for getting such a great deal on this, and Carlos Slim, well, I can't believe that he ever made one dollar in business considering how poorly a job he did with CompUSA. He turned a $1 billion dollar investment into probably less than $200-300 million once you figure in the value of all the inventory CompUSA had on hand when the company closed its doors last year. I'm glad I'm not one of his investors right now.

Despite all the prior negativity of this post, the cool thing is that my favorite store is actually going to stay open. Hopefully with new management (actually competent management, which hasn't been around for a long time), CompUSA will do well enough to stay open and prosper for years to come. Who knows, maybe someday CompUSA will make a comeback. What? You scoff at the thought of CompUSA regaining its former glory as the largest electronics retailer in the nation? Well, let me tell you, it has been done before (the example of GM comes to mind), but that is a story for another day....

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