CLIENT | 30-Dec-13 | The Australian | David Dicker puts the IT hype back in its box
Extract from full article which can be found at, LINK | Dicker Data
FOR all the hype about the rapidly evolving IT industry, Dicker Data founder David Dicker’s heretical view is that the more things change, the more things stay the same.
“The industry is not moving at the spaceship speed that people would like you to think,” says the 60-year-old former programmer. “While there’s a lot of talk about exciting things happening, a fair bit of it is more talk than action.”
The low-key distributor of IT hardware such as PCs, servers and peripherals can’t be accused of excessive talk – or action. In essence, Dicker’s strategy manifesto is to grow the company he founded in his lounge room in 1978 – but stick to the same core business of distributing IT hardware such as PCs, servers and peripherals such as printers.
Listed since January 2011, the $125 million market cap entity has flown well below the radar of investors. That’s no wonder, given chairman and chief executive Dicker owns 50 per cent of the stock, while his ex-wife (and non-executive director) Fiona Brown accounts for another 45 per cent.
Furthering the unorthodoxy, Dicker Data pays out almost all its earnings as dividends and neither Dicker nor Brown draw a salary.
“When I started, the industry was dominated by a handful of large multinationals,” he says. “The only thing that’s changed is they’re not the same ones.”
With the register tightly held by the founders, Dicker fields the enduring query of why the company bothers to be listed at all. The listing, he muses, was “slightly different” to that proposed by the experts, who urged a higher free float and the addition of outside directors.
Deterred by corporate governance no-nos such as the Dicker dual chairman-chief executive role, institutions are notably absent from the register.
“Our directors are the people running the business and when you get outside guys coming in they have to come up with better ideas than the guys running it,” he says.
“We get a much better result than any of our competitors.”
Dicker Data is yet to tap the market for capital — its debt is on the high side but the company owns its key facility at Kurnell, in Sydney’s south – but there’s still the intention to fund the free float to 20-30 per cent. The company does not currently require the capital – hence the full dividend payout – but Dicker alludes coyly to “other projects” that may necessitate a raising.
“Gross margins are so low you can’t get business back on a price basis,” Dicker says. “That’s where our strength has always been. We pay much higher wages but we deliver a higher profit margin.”
An ever-present risk is that one or more vendors move their distribution in-house. Dicker says that while any “crazy scheme” is possible, past attempts have proved an “unmitigated disaster”.
Dicker says he and Brown were close to selling the business for $10m a decade ago — but the purchaser was either chronically disorganised or got cold feet.
These days Brown has no day-to-day involvement in the business. “I’m basically the architect of our strategy and Fiona is happy to go along with that,” Dicker says.
He says he will always listen to a buyer with a bulging cheque book, but is reluctant to savour Dubai’s desert delights full-time.
“What would I do? I like going to work,” he says.
“I’m perfectly happy to stay here and be taken out in a wooden box.”