ODP, parent of Office Depot and the CompuCom IT services business, is "performing an end-to-end business review" of CompuCom and "evaluating all options to drive future value and success into 2021 and beyond,” CEO Gerry Smith said in an ODP earnings statement this morning.
In the ODP Q3 earnings report:
- Business solutions division sales fell 11 percent to $1.2 billion;
- retail division sales fell 3 percent to $1.1 billion; and
- CompuCom division sales fell 22 percent to $197 million.
Still, ODP's overall Q3 results generally beat Wall Street's expectations.
ODP: More Clues About CompuCom's Future
In the ODP Q3 earnings presentation, the company said:
- COVID-19 continues to impact CompuCom's financial performance
- CompuCom is seeing slower project work and lower product sales
- But the division continues to have a stable annuity services business
In the earnings statement, ODP officials did not mention whether CompuCom is essentially up for sale, or whether the parent company is seeking offers for the IT services business.
During the company's earnings call, ODP CEO Gerry Smith shed slightly more light on the situation, stating:
"With unique capabilities to support distributed workforces, with state-of-the-art technology and an expansive technical and field support structure, CompuCom is well-positioned to capitalize on opportunities in the future. However, we recognize that CompuCom has not performed up to its potential, and we're taking action including embarking on an end-to-end business review and evaluating all options to drive future value and success in 2021 and beyond. These may include potential partnerships, joint ventures or other structural changes to increase future value."
ChannelE2E has reached out to the company for clarification and/or additional comment, and we'll update this article if we gather any additional relevant information.
Meanwhile, M&A demand for IT services businesses remains strong as private equity firms and MSPs seek to add recurring revenues to their platform investments. ChannelE2E has tracked 450 M&A deals involving MSPs, IT consulting firms and technology businesses so far in 2020.
CompuCom's Mixed Business History
Office Depot acquired CompuCom for a lofty 10 times earnings in October 2017. The IT services business unit has generated mixed performance under ODP's ownership -- though CompuCom President Mick Slattery described key business progress to ChannelE2E in June 2020.
