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From: cmcmanis%pepper@Sun.COM (Chuck McManis)
Newsgroups: comp.sys.atari.st
Subject: Re: Atari buying Federated?
Message-ID: <26592@sun.uucp>
Date: Wed, 26-Aug-87 14:44:16 EDT
Article-I.D.: sun.26592
Posted: Wed Aug 26 14:44:16 1987
Date-Received: Fri, 28-Aug-87 06:32:58 EDT
References: <8708241755.AA18954@orville.arpa> <26410@sun.uucp> <653@cup.portal.com>
Sender: news@sun.uucp
Reply-To: cmcmanis@sun.UUCP (Chuck McManis)
Organization: Sun Microsystems, Mountain View
Lines: 28

Well I guess it is about as true as it gets, so Atari has offered 67 million
dollars for Federated, which is a chain of Stereo/TV stores with some forays
into the computer business. And they are offering cash, not stocks or bonds
or warrants, and Federated has been losing money lately. The opinion of the
analysts that the Wall Street Journal talked to were "You can't buy 
distribution, even IBM knows that." As you can see they were not too 
impressed. But what does it mean for Atari? Well, it means that they now 
have a bunch of stores in the western U.S. that will sell the ST as Atari
wants them to be sold, I assume that means as business machines, and they
will be able to specify that these dealers *not* sell any other computer 
brand which has hurt Atari in the past. It also seems to open up the 
gates for some blanket advertising since the copy can read 'at your nearest
Federated Store' as opposed to 'your nearest Atari dealer.' I hope the
dealers don't take it personally that they will have this captive dealer
network competing with them. [Scenario : 10 year dealer mumble-fratz computers
makes their business selling Atari computers at steep discounts, suddenly they
impacting the sales of the Federated store in their neighborhood. Atari can
say 'Sell them at List Price or we'll kick you off the Authorized Dealer 
list.' What do they do? Go grey market?] Anyway, at least in the short
term it looks like a real drain on Atari's cash reserves and earnings 
potential. In the longer term it could be like Tandy and Radio Shack, it's
tough to call. In either event it is going to make for some interesting
rearrangements of priorities at Atari. 


--Chuck McManis
uucp: {anywhere}!sun!cmcmanis   BIX: cmcmanis  ARPAnet: cmcmanis@sun.com
These opinions are my own and no one elses, but you knew that didn't you.