Seagate dumps distributor eSys

  • Share via facebook
  • Tweet this
  • Bookmark and Share

Hard drive giant Seagate has taken the dramatic step of dropping eSys as a global distribution partner following its alleged refusal to co-operate with an audit of point of sale records.

The US vendor has already ceased shipments of its products to Singapore-based eSys, which was previously Seagate’s largest distribution partner and represented 6% of its revenues — equivalent to US$168million for the three months to the end of September.

In a filing to the US Securities and Exchange Commission (SEC) on November 7, Seagate claimed eSys officials indicated that an audit would “likely reveal” irregularities in its compliance with the terms of the incentive programme as well as other unspecified irregularities.

Seagate also claimed in the filing that eSys has failed to make full current payments to the vendor. The hard drive specialist said the outstanding balance on its accounts receivables was around US$50million and it has set aside an additional provision of US$40million for doubtful accounts in the quarter ending September 29.

“We recorded this additional allowance due to the inherent uncertainties following the termination of the distribution relationships, eSys’ current delinquency in payments and failure to pay amounts when promised, and eSys’ failure to comply with the terms of its commercial agreements with us,” read the SEC filing.

eSys officials have indicated that it intends to pay all amounts owed and defended the distributor’s refusal to meet the specific requirements of Seagate’s audit process.

One senior eSys executive contacted by IT Weekly sister publication Channel Middle East claimed that the “intrusive nature of the audit” to be undertaken by Seagate was one of the significant factors behind its refusal of the inspection.

The termination of the two companies’ relationship comes only two months after eSys picked up the ‘Number One Distributor Award’ from Seagate for its achievements in the hard drive vendor’s most recent financial year.

Speaking at the time of the award, Vikas Goel, chairman and managing director at eSys, said: “This is yet another testimony of the enduring relationship which has gone from strength to strength since we started six years ago.”

Related:
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Features & Analysis
Making Connections: Lou Lou Khazen Baz

Making Connections: Lou Lou Khazen Baz

In the space of just two years Nabbesh has grown from a bold...

1
Building a BIZness: Q&A with Hazel Jackson

Building a BIZness: Q&A with Hazel Jackson

Since landing in Dubai in the 1990s, Hazel Jackson has built...

Do celebrity branded projects ever work?

Do celebrity branded projects ever work?

The long list of celebrity-endorsed real estate developments...

1
Most Discussed
  • 24
    World's most pierced man refused entry to the UAE

    Tolerance has its limits everywhere including Dubai and those who considered Dubai a lawless circus were held accountable...so thank you Dubai authorities... more

    Thursday, 21 August 2014 10:51 PM - Khalil
  • 23
    Baby NOT on board?

    Some of you cry babies need to get your own personal apartments on the plane ! You cry more then the babies I have seen in my travels. LOL more

    Thursday, 28 August 2014 9:10 AM - Jim
  • 21
    Israel “must be punished” over Gaza, says Dubai police chief

    This high moral ground that Mick is talking abt sound very familiar. May I remind Mick that the US & its British ally alone killed over 1 million innocent... more

    Thursday, 7 August 2014 4:12 PM - Mathew