Deauthorized HP Platinum Partner Finds A Buyer

NWN has acquired MSE's customer base and some assets in a speedy transaction that closed on Jan. 14, just five days after NWN learned that MSE might be for sale, said Mont Phelps, president and CEO of NWN, a Waltham, Mass.-based outfit that already holds Gold-level badges from HP, Cisco Systems and Microsoft. Terms of the deal were not disclosed.

"It's a very solid, financially performing company, but its biggest vendor partner was HP, and they lost the franchise ... with 30 days notice," Phelps said. "It put a really big burden on them going forward."

MSE, which also carried Gold badges from Cisco and Microsoft, last year claimed $200 million in revenue, Phelps said, noting that he believes MSE likely influenced $200 million worth of business but brought in actual revenues that were "somewhat less."

NWN is also retaining some 50-plus MSE employees but none of MSE's previous ownership or top management, who have all left concurrent with the sale, Phelps said. Frankie Wong, president of MSE, is among the departing executives, he said.

As reported on CRN.com last week, HP deauthorized MSE effective Jan. 12 amid allegations of alleged improprieties surrounding K-12 school contracts in Texas. An HP spokesman last week would not comment on why MSE had been deauthorized.

But Houston-area solution providers and Houston and Dallas newspapers reported that a Dallas school administrator accepted many free trips on a luxury boat allegedly owned by MSE in 2005. That apparently was one of the charges that ultimately sparked an ongoing public-corruption investigation by the FBI and the U.S. Attorney's office.

Wong in an e-mailed comment to CRN last week maintained the company's innocence and denied that it had ever participated in fraudulent practices.

One solution provider familiar with MSE said the company's alleged improprieties cast a shadow across the industry. "For those of us who play by the rules and are above board, it doesn't bode well for us as an industry," said the solution provider, who asked not to be identified.

"I'm not interested in looking back. I can't change the past," Phelps said of the controversy. "It presented a business opportunity for us that we believe we can build on."

Phelps expects NWN to use its HP Gold status to continue serving MSE's existing HP customer base. The additional HP volume should help NWN quickly attain HP Platinum status, he said.

For NWN, the deal is the latest in a series of acquisitions aimed at expanding the solution provider's customer base and geographic reach, which now includes the East Coast and southwest. The company last fall snapped up three systems integration firms to build out its unified communications, networking, storage, security and managed services offerings.

Craig Zarley contributed to this story.