Micron lands Inacom Government

After months of negotiations, Micron Electronics Inc. announced April 11

it had acquired Inacom Government Systems Inc. for an undisclosed cash amount.

Through the purchase agreement, Micron will acquire Inacom's government

contracts, vendor reseller agreements and General Services Administration-

approved purchasing vehicles. Micron plans to close Inacom's Vienna, Va.,

office and retain about 16 of the 50 employees from that office. Micron

also will assume Inacom's telephone numbers and World Wide Web sites.

Inacom will be available to answer customers' questions until the last

contract is transferred to Micron. But at that point, "Inacom will cease

to exist," said Harry Heisler, vice president and general manager of Micron

Government Computer Systems Inc.

Inacom made its presence felt in the federal market in 1998 through

its acquisition of distributor Vanstar Corp. Vanstar likewise had increased

its presence in the federal market largely through its acquisition of Sysorex

Information Systems Inc., a PC reseller and systems integrator that focused

primarily on the federal market.

According to Heisler, Micron decided to purchase Inacom because of its

success in systems integration, service capabilities and seat management

contracts, as well as its leasing capabilities. The addition of services — such as systems analysis, network design and integration, systems installation

and integration, training, maintenance and technical support — will enable

Micron to be more competitive against market leaders such as Dell Computer

Corp., according to industry experts.

"This acquisition enriches the options we're able to offer and, along

with e-service enhancements we're making on our GSA schedule, [will] better

position Micron as a leader in helping government keep pace with the evolution

to an Internet-centric society," Heisler said.

But according to industry experts, Micron's decision to cut employees

may indirectly affect the company's success. "Most of the time when you

acquire a company, you buy it for the people, not just to acquire the contracts,"

said Chip Mather, vice president of Acquisition Solutions Inc. "The success

of the company will depend on the ability of the different cultures to come

together. If you replace one culture with another, you're just buying contracts."

Micron has the ability to fulfill Inacom's government contracts, and

services to customers should not be disrupted, Heisler said. "We worked

with Inacom on a number of contracts," he said. "We will now be the prime

listed on the contract instead of being a subcontractor."

Although government customers have not received many details of the

acquisition, many said they were not concerned about Micron's ability to

meet their service needs.

"It is not unusual, given the sensitive nature of such an acquisition,"

said Lt. Col. Glenn Taylor, director of the Commercial Information Technology

Product Area Directorate (CIT-PAD) at the Gunter Annex of Maxwell Air Force

Base, Montgomery, Ala.

CIT-PAD, part of the Air Force Standard Systems Group, awarded Inacom

a blanket purchase agreement for rugged portable computers as part of its

Information Technology Tools program in April 1999. "We look forward to

hearing the plans for integrating the two companies and their products and

service offerings," Taylor said.

Inacom and Micron have been working to solidify a deal for more than

three months, according to Heisler. In December, Inacom decided it was not

in the company's best interest to stay in the federal market, and the approach

of government resellers, such as GTSI and Intelligent Decisions Inc., to

purchase the $140 million subsidiary, finalized the corporation's decision.

The sale of Inacom Government Systems comes two months after Compaq Computer

Corp. purchased Inacom Corp.'s customization and logistics division.

Through that deal, worth $370 million, Compaq took control of Inacom's

PC distribution and formed a new subsidiary called Custom Edge. The Compaq

sale was finalized Feb. 16 and was part of Inacom Corp.'s companywide restructuring.

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