Systemax exits hosted e-commerce software business

Systemax Inc. is exiting the ProfitCenter Software (PCS) hosted software business and a majority of the PCS workforce will be leaving the company.

The company pointed to the current economy for its difficulties selling PCS to potential customers. The PCS product is a Java, Web-based order management and e-commerce system.

“While we had significantly narrowed the focus of our PCS business segment over the last several quarters in an effort to establish a sustainable business model, after careful evaluation we have concluded it is in the best interests of the company and its shareholders to reduce our investment in the software business in order to improve our profitability, strengthen our balance sheet, improve our operating cash flows and deploy capital in areas which are closer to the core of our direct marketing and retail businesses,” said Richard Leeds, chairman and CEO of Systemax, in a statement.

The company will continue to use PCS in-house.

During 2008, revenues from the PCS segment generated less than $500,000 of the company’s total revenues of $3 billion. The company expects the consolidation will result in a reduction of its cost structure exceeding $10 million annually.

The news follows Systemax’s recent acquisition of the Circuit City e-commerce business at auction. In January 2008, the company also acquired the intellectual property of bankrupt CompUSA and is currently remodeling the brand’s stores in the US. Systemax manufactures and sells consumer electronics via the TigerDirect brand.

The company also recently reported that consolidated net sales for the first quarter ended March 31 grew 4% for a total of $752.3 million. North American technology product sales grew 21%. In the industrial products category, revenue declined 20%.

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