Electronic News: Acquisition? Canat Roulette Out - Company Business and Marketing

During the third week of May, manufacturers and distributors convening under the torrid sun of Las Vegas for the 63rd Electronic Distribution Show & Conference (EDS) may be watching each other buying each other up.

The "show" part of the event might have somewhat diminished over the years, but the EDS still is a good occasion to get a feel for what the current issues are as well as things to come, experienced attendees say.

"The EDS is primarily a place where distributors meet with their suppliers," said Robin Gray, executive vice president of the National Electronic Distributors Association (NEDA). This May, Gray predicts, one popular discussion topic will be Tyco International Ltd.'s attempt to penetrate the connector market through the acquisition of Thomas & Betts Corp.

Acquisitions in general, industry analysts and executives agree, will be a source for all sorts of speculations about consolidation in the industry. There have been many important acquisitions recently and the trend is not likely to end any time soon, believes George Perris, president of Sierra Marketing Group. He envisions global distribution companies making more takeovers, but in a more selective way, acquiring companies that serve specific niches.

Suppliers' recent acquisitions and the integration of these companies will be extensively discussed, agrees Tom McCartney, senior vice president and director of the IP&E Product Business Group at Avnet Electronics Marketing.

But an even more pressing issue for distributors, said McCartney, is the capital equipment expansion. Because the electronics industry is still experiencing component shortages, the distribution industry is concerned about manufacturers' ability to meet their production goals. The EDS is the perfect place for distributors to inquire about these concerns, he said.

"Internet will also be a hot issue this year," said Perris, who has attended the show so often that he doesn't remember the exact number of times he's been here. Business-to-business (B2B) e-commerce start-ups have efficiently replaced brokers in the "spot" market, according to Perris, making the whole excess inventory game a much cleaner and more legitimate business. E-commerce also brings enhanced matching services to this market, where OEMs and distribution companies caught with excess inventoryaoften piled up in fear of getting caught by a shortfallacan find buyers and get rid of it in an anonymous environment.

About 10 to 12 B2B companies are expected to take part at EDS. Some of them signed up but decided to withdraw from the event. There are two reasons that could explain that, said Laurence Kaufman, PR Counsel to the EDS Corp. First, EDS focuses on authorized distributors and most B2Bs do not fit in that category. Also, some of these e-commerce businesses are into semiconductors, while the show hosts, for the most part, companies that carry passives or electro-mechanical components, he added.