Home-Grown Computer Firm Suffers Setback
Four years ago, Ballard Computer marketing chief Alex Peder stood in the parking lot of a former Kirkland, Wash., auto dealership and made a bold prediction:
“We can beat the superstores at their own game,” he said.
It was no secret that the superstores - national computer chains known for high-volume selling and cutthroat discounting - were headed for the Pacific Northwest. The presence of Microsoft, Boeing, Immunex and hundreds of related high-technology enterprises made the region ripe for a boom in computer use.
Corporations were switching from big, centralized computers to network-linked PCs. Schools were under pressure to expand computer-based instruction. Multimedia CD-ROM loomed on the horizon as the next big home-consumer market.
Since its 1984 debut in Seattle, the store with the schooner logo on its sign had seen enough computer shops come and go to know the law of the sea: Expand, or be swallowed by the bigger fish.
Ballard converted the car dealership to a bright, brassy affiliate. Three other stores were added. Negotiations began in an effort to acquire six additional sites, including a second Seattle outlet and a Portland store. And plans were made for 22 additional stores around the Northwest, including Spokane.
But the big picture went dark 10 days ago. Ballard Computer filed for Chapter 11 bankruptcy protection, closed two stores and laid off 60 to 80 employees, moves that shocked even industry insiders.
The Ballard Computer dream seemed to be ending not with a whimper but a bang.
“I’m stunned,” said Peder, a share holder of the privately held chain.
When he found out the service and support operations were being scaled down, he was incredulous: “Wait a minute,” he asked. “You’re closing down the things that made this company great?”
It was a reaction shared by many current and former employees who remember the not-so-distant days when Ballard Computer seemed invincible. Against the invasion of faceless national superstores, Ballard was seen as a bulwark of community identity: the Nordstrom or Starbucks of its genre.
Irony of ironies, then, that the new Ballard Computer - sculpted over a weekend of feverish housecleaning, renovation and recasting - turns out to look a lot like the old. Last Sunday, 48 hours after filing for Chapter 11 reorganization in bankruptcy court, owner Fred Paulsell talked animatedly of reviving the chain with several million dollars in financing from Canadian investors.
Orders will be filled and service on about 250 units on hand completed, Paulsell said. Meanwhile, David Chalk, the founder of Vancouver, B.C.-based Doppler Computer, who heads the investment group, promised to restore the retailer - name intact - to its former glory.
“I know what Ballard Computer is,” said Chalk, who visited the store frequently over the years. Chalk spent much of the weekend consolidating offices at the flagship store in Ballard. “The more I moved things around, the more people said, ‘Hmm, that’s where it used to be.”’
Optimism notwithstanding, the future is uncertain for the proud retailer. Ballard still must file a reorganization plan, which it plans to do within two weeks, and receive court approval, which will take another two to three weeks, Paulsell predicted.
Although unlikely, a competing plan for acquisition could complicate the situation. Then it will be a matter of winning back a loyal customer base, which dropped as much as 40 percent after bankruptcy rumors began circulating.
Paulsell thinks Ballard can pull it off. “People have a high forgiveness factor for a local institution,” he said. “Ballard Computer has a niche - is a niche - all to itself.”
Whatever happens, one thing is clear: The strategies Ballard adopted after Paulsell’s purchase in 1991 from founder Jeff Sandine not only failed to take the retailer to the next level of competition, it robbed Ballard Computer of its most valuable resources, including its sleek, dollar-wise management and its faithful customer base.
“We made wrong decisions,” Paulsell acknowledged. “And we paid the price.”