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September 8, 1995

ECONOCOM REPORTS DIP IN PROFITS

By CBR Staff Writer

Econocom SA, the Spanish subsidiary of the French Econocom Group, which claims the highest market share for rental activities, maintenance and the sale of second-hand equipment, with more than 1,000 clients in Spain, recently celebrated its tenth birthday and announced turnover up 22.5% at $11.5m for the fiscal 1994. Lease income accounted for 59% of this figure, maintenance provided 32% and sales of second-hand equipment totalled 9% of turnover. Net profits of $82,645 were reported, down from $181,818 last time. Econocom SA general manager Jose Ignacio Canal, explained that the amalgamation of Econocom Mantenimiento (Maintenance) and Econocom Espana, which was completed in 1994, led to restructuring and legal costs that had eaten into the profits. Commercial director Fernando Ponce commented that there was still plenty of scope for development of the rental market in Spain; unlike other countries, where there is considerable business in non-IBM Corp equipment, in Spain the bulk of Econocom’s business stems from IBM equipment and large systems. As for second-hand sales, the company concentrates almost entirely on IBM equipment, AS/400 systems in particular. Ponce pointed out that this is mainly due to the fact that many manufacturers do not support this kind of activity, When in reality what we are doing is endowing the equipment with a high added value, for if users know that the system to be acquired will re-enter the market when they have finished with it and some of their investment will be recovered, this will no doubt influence their choice of brand. Many of Spain’s large chain stores, such as Dia, Macro, Continente and Gatisa are strong second-hand buyers. The company has also moved into the area of microcomputing, in which a wide range of brand names are offered. Renti ng here enables users to update their equipment continually and upgrade to the new technologies – a strong argument against buying, Ponce said. The company currently employs 49 staff divided among 12 offices in Spain, in Barcelona, Bilbao, Gijon, Granada, La Coruna, Madrid, Murcia, Palma de Mallorca, Santa Cruz de Tenerife, Seville, Valencia and Zaragoza. The turnover target for 1995 has been set at $12.4m with profits of $330,575.

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