Fingerhut Buys Stake in Computer Direct Marketer

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Cataloger Fingerhut Cos. Inc., Minnetonka, MN, known for its installment-plan catalogs selling everything from clothing to housewares, has added another computer products and services company to its growing roster of investments. The company announced Feb. 25 that it will acquire a 19.9-percent stake in Hand Technologies Inc., Austin, TX., which uses an Internet-assisted direct sales force to sell computer hardware, software and peripherals to consumers and small businesses.


Fingerhut, which itself recently was acquired by Macy's parent Federated Department Stores Inc., said the two companies would work together to "create a new channel for marketing computer systems and services to the mass market."


Hand, founded by former Dell Computer executives Martin Slagter and Andrew Harris, supports its sales force by providing access to training and other sales tools through its web site, located at www.handtech.com., where the company also provides an electronic catalog of computer products available for shipment directly from distributors. Harris said Hand hoped to grow its business by marketing products and services through Fingerhut's 31 million-person database and taking advantage of Fingerhut's direct marketing infrastructure.


"The reason why we've done the Fingerhut deal is that gives us an absolutely efficient marketing vehicle to go out and recruit tech consultants, it gives us an extremely efficient marketing vehicle to go out and approach the mass market through the database of Fingerhut and the 500 million mailings they do a year, and it gives us the financing ability the mass market needs," he said.


Currently, Hand's sales agents do their own localized marketing. In addition to receiving commissions on sales, they also receive compensation for recruiting and managing other sales representatives.


Harris declined to reveal what the annual revenues are at the two-year-old company, although he did say the business grew by 250 percent during the past year and was expected to grow by five times through its Fingerhut relationship.


About 65 percent of Hand's customers are individual consumers and home-office workers, while the rest are small businesses and other accounts.


Fingerhut, which has acquired minority positions in a several other online and catalog ventures during the past seven months, also has options to acquire a larger stake in Hand Technologies. It currently is the largest among 140 private investors in Hand Technologies.


Although some reports said Hand was planning an initial public offering this year, Harris said no timetable has been set for offering stock to the public.


Fingerhut's other investments include positions in PC Flowers & Gifts, Arizona Mail Order, Bedford Fair, Popular Club, Freeshop.com and TheZone Network and Roxy.com.
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