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October 25, 1995

PST LAUNCHES DISTRIBUTION ARM TO HANDLE MEMORY CHIPS, AS WELL AS THE ODD REFRIGERATOR OR WATCH

By CBR Staff Writer

Maidenhead, Berkshire-based PST (Trading) Ltd, trader in surplus personal computer stock, will help balance generic memory supply and demand with the launch of PST (Distribution) Ltd, a new company focusing on the generic memory market. Unlike PST Trading, which buys equipment for stock, PST Distribution will become a sort of broker in the memory market, but one that will enter into contracts with manufacturers and OEM suppliers to buy surplus raw memory at a fixed price, with its own cash. Founder and chairman Howard Strowman said due to the demand for memory, large computer manufacturers have to pre-order personal computer memory, but may overestimate the number of computers they will build in a given month. At the same time, smaller systems builders suffer from a shortage of memory. Where PST Distribution can see a ready market for the memory at the right price, it will sign a contract with a computer manufacturer to take all its excess stock each month. Strowman says the margins on this memory may be very small, but the quantities are high, and he says PST has the cash resources and contacts to both purchase the stock and sell it on. PST Distribution has turned over more than $4m in its first six weeks of trading. Strowman says the company has a regular line of supply as a result of relationships it has built with every major personal computer manufacturer during some 12 years of PST Trading’s business. Similarly it has global placing power he says, with wholesalers and and some distributors. PST Trading does not act as a broker which simply marries buyer and seller and uses buyer’s money to make the purchase. It buys stock from manufacturers, usually for cash and holds it in its 40,000 square feet of bonded warehouse before finding a buyer or buyers. The company has its own logistics manager, and distributes and delivers stock to its customers. Typically, the sort of stock it buys is not quite state of the art. It started by buying 180,000 Sinclair home computers from Amstrad Plc in 1985, was buying and selling 80286 personal computers when the 80386 had just been launched, and it continues to find markets for yesterday’s technology.

Professional funeral

Strowman admits that when a manufacturer comes to PST, it is usually bad news for the manufacturer, but he likens PST’s approach to a professional funeral. He is currently buying and selling mono notebook computers, dual speed CD-ROM drives and dot matrix printers and anything it thinks there’s a market for somewhere in the world. This does not preclude the occasional supply of refrigerators, watches or print toner cartridges. However, Strowman says PST will only sell into markets that do not conflict with manufacturers’ channels, and abides strictly by the suppliers wishes. PST, sold by Strowman to Cannon Street Investments Plc in 1987 and bought back by him in 1992 for a sum considerably lower than the original purchase price, turned over around ú20m last year, with pre-tax profits of about ú2m. With the new memory company, Strowman predicts turnover will rise dramatically, but he’s not a man impressed by turnover alone. As he says, turnover is vanity, profit is sanity.

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