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November 24, 1998

EL CAMINO MOVES INTO EUROPE WITH OAK BROOK BUY

By CBR Staff Writer

El Camino Resources is girding its loins for battle in the European midrange market, and this time its not looking for a lease portfolio to buy, but rather services and expertise. To that end, El Camino, of Woodland Hills, California has just acquired a 70% stake in Oak Brook International Ltd a British IBM midrange specialist. Both companies are private, so the exact details are unknown. Oak Brook was founded in 1995 and got its start implementing Lakeview Technology’s Mimix line of high availability software products for AS/400s; and has been Lakeview’s leading distributor for several years running. In 1996, Oak Brook expanded into more generic AS/400 consulting services and now has two dozen employees that provide application benchmarking, problem management, project management, backup and recovery and AS/400 CISC-to-RISC migration services. The company is responsible in one way or another for services at about 250 AS/400 9406 shops in the United Kingdom. For fiscal 1997, Oak Brook had revenues of about $3.5m, which may not sound like much compared to El Camino’s $700m in sales during the same period, but remember that services businesses such as those being peddled by Oak Brook are a lot more profitable than equipment reselling and leasing, which is one of the main reasons why El Camino’s Real division ditched its wholesale distribution business last summer. The Oak Brook deal complements El Camino’s purchase in July of a majority stake in becom Information Systems GmbH, located in Schwerte, Germany. Like Oak Brook, becom is a relatively new company – it is less than five years old – but with sales of $12m for 1998, it has grown to be one of IBM’s largest business partners in the German market. (El Camino took a 65% stake in becom, but didn’t disclose any other financial details.) El Camino says that becom, which is an IBM S/390 business partner but also sells AS/400s and RS/6000s as well as being a Lotus partner and a Microsoft solution provider, has been growing at more than 60% per year since it was founded. For the moment, both Oak Brook and becom will operate under their own names as separate subsidiaries of El Camino.

Early growth

El Camino has been fighting to grow its European business since it bought a majority stake Applied Technology (Europe) Limited in March 1992, a London-based AS/400 and RS/6000 dealer. ATC, which was ironically an early investor in El Camino back in 1990 and helped to fuel El Camino’s early growth spurt as the IBM mainframe market was maturing and the AS/400 was just taking off, and found itself being eaten by its stronger California partner. In February 1996, El Camino acquired Dataserv Group Ltd, a European leasing firm with operations in Germany and the United Kingdom, and in the prior year it bought WS Leasing GmbH, based in Cologne, Germany. Between 1990 and 1995, El Camino had bought seven other companies or leasing portfolios of defunct companies, most notably the leasing portfolios of Econocom USA and Pacific Atlantic Leasing, a joint venture between PacifiCorp and Bell Atlantic Systems Leasing. Now that the computer leasing business has diminished significantly from its heyday back in the mid- 1990s, when it bought up all those leasing bases, El Camino needs to find another way to grow revenues. It would be reasonable guess that El Camino is looking in other geographical markets for expansion. Italy, for instance, is the largest market for AS/400s in Europe, and France is third behind number two Germany, yet El Camino has not made any acquisitions in these markets. Spain and Portugal would also be a good area to pick up some local services companies as well. á

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