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Merisel Fattens Federal Business <@VM>Army Dips Into Local Reseller Pool<@VM>Westcon Tags Lucent For Distribution Deal

By Richard McCaffery

Merisel Inc., El Segundo, Calif., beat analysts' estimates by 2 cents a share for the quarter that ended March 31, after a one-time charge of $21 million to settle litigation between Merisel and certain creditors.

Merisel reported net income of $491,000 minus the charge, down from $3.6 million last year. Sales jumped 14 percent to $1.3 billion for the quarter compared to the same period last year.

But the company's government and education division has been on a roll since forming a dedicated unit to cover those markets in January. In the past six months, the division has increased from 60 to 140 its stable of manufacturers that offer discounts to government and education customers.

It is offering General Services Administration schedule support to more than 100 resellers, up from zero last year. Services include obtaining letters of commitment from manufacturers and offering technology refresh services.

Merisel has teamed with Comdisco Inc. of Rosemont, Ill., to offer government and education resellers leasing services, and Merisel is working closely with resellers bidding large state and local procurement contracts, offering support such as proposal writing and product procurement.

Merisel's government division, which had seven employees late last year, now has more than 30, said Curt Cornell, government and education division director. In the next six months, Merisel wants to expand the services it offers state and local government resellers and find ways to key recent infrastructure upgrades to its government resellers, he said.

The company just went live with a large enterprise resource planning software system, and Cornell wants the systems' applications tweaked to help its government resellers.

The Army Small Computer Program awarded its $87 million Portable-3 contract to Government Technology Services Inc. and Intelligent Decisions Inc., both of Chantilly, Va., May 27. The resellers will provide the Army with portable computers, notebooks and peripherals.

The two-year contract, with an option for a third year, is open to all government agencies. It replaces the Portable-2 contract, which has been extended until Sept. 1 or when the notice to proceed on Portable-3 is issued. Portable-2 incumbents were GTSI and InaCom Corp., Omaha, Neb.

GTSI, which has won five big contracts since March, is a government reseller that had sales of $606 million last year. Intelligent Decisions designs and manufactures a line of personal computers, workstations and servers. The privately held company also is a reseller for most of the major hardware and software resellers.
Networking distributor Westcon Inc. of Eastchester, N.Y., and Lucent Technologies Inc. of Murray Hill, N.J., have entered into an agreement that allows Westcon to distribute Lucent's networking products to resellers and systems integrators worldwide.

Westcon will distribute Lucent's local and wide area switching products, convergence products, remote access products and other equipment throughout North America, Latin America, Asia-Pacific, Europe, the Middle East and Africa. The agreement allows Westcon's resellers to offer Lucent products along with Westcon's services, such as certification programs, authorization and warranty services, training and sales support.

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