Dot-coms unload equipment

Associated Press

CAMPBELL, Calif. — CDworld.com folded last week after six years in business. The company's 11 workers have been let go and the small offices in a strip mall are nearly bare.

But the music, video and games e-tailer is still hoping to unload some valuable merchandise — namely, the nuts and bolts of the Web site itself: a Cisco Systems device that directs Internet traffic, a refrigerator-sized server by Sun Microsystems and smaller ones from Sun, Hewlett-Packard, IBM and Compaq.

"I'm sure we will sell it," said Annette Martin, who ran CDworld.com with her husband, Bruce Pettyjohn. "We've got good equipment."

It happens that Martin also is a psychic adviser who has appeared on television, but it doesn't take a sixth sense to know that the used pieces of her Web site will find buyers.

Like ants swarming over remnants of a summer picnic, obscure equipment resellers all over the country are reaching out for the wealth of inventory becoming available from dismantled dot-coms. Almost all those parts can be sold again — to another startup chasing a dot-com dream, perhaps, or an equipment-leasing company looking for a good deal.

"There's a lot of used equipment on the market right now," said Ben Nelson, who handles online sales for UsedRouter.com, a 17-employee company in Las Lunas, N.M.

The dot-com meltdown ripples through the rest of the high-tech economy. Hardware companies are moaning that demand for everything from personal computers to telecommunications equipment has all but vanished, and the availability of tons of inexpensive used equipment makes it that much harder to dig out.

Secondhand equipment generally doesn't appeal to large businesses that want custom-built networks, service contracts and warranties. But smaller companies or service providers with technical know-how can do well digging into the scrap heap. This isn't like buying a used car — the switches and hubs that make up networks, for example, generally don't suffer from wear and tear.

Gary Sapp, president and chief executive officer of Tangent Communications Inc., an electronic equipment reseller in Des Plaines, Ill., says a quarter of his inventory comes from dead dot-coms that defaulted on equipment leases or declared bankruptcy. The rest comes mostly from large companies that have scaled back or changed their technology.

Not surprisingly, economic conditions are lowering prices. For example, one Cisco router — which directs traffic on a network — that a year ago cost between $3,500 and $4,000 on the secondary market today goes for $2,500 to $3,000. New, it sold for $10,200.

"It's definitely increasing the ability to buy inventory," Sapp said. "We had some holes in our inventory — we filled those."

Tangent isn't immune to the high-tech demand slowdown, but Sapp believes that when the economy revives, he will be waiting with some very good deals. Another Cisco router that sold new for $2,495 can be had used from Tangent's site for $595.

"It's just a matter of time before there will be demand, and there probably will be pent-up demand," Sapp said.

At Excess Solutions, a seven-employee electronic parts broker working out of a ramshackle white building in a San Jose industrial zone, owner Mike Giordano is buying up as much as he can while prices are low.

However, "I'm afraid when the market does turn back, the technology will be so far past what's sitting on the shelf," he said.

• On the Web:

Equipment resellers:

http://www.tancom.com
http://www.excess-solutions.com
http://www.usedrouter.com