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SOUTHERN CALIFORNIA ENTERPRISE : Yesterday's Computers a Boon for Junkyards : Technology: Recycling, reselling or rebuilding the outdated machines keeps scores of small firms busy.

November 14, 1994|ROSS KERBER | TIMES STAFF WRITER

Truckloads of aged personal computers, printers and mainframe equipment pile up in the parking lot of a scrap yard built on the site of an old Anaheim racquetball club.

Silicon Salvage Inc. work crews wielding electric screwdrivers and power saws will soon tear them apart to salvage parts for resale or to be melted down for their gold and silver plating.

Silicon Salvage owner Chuck Hulse describes his operation as a junkyard, but it's more of an electronic butcher shop; most of the machines arrive in good working order. They are yesterday's models, slower PCs that can't run the latest software or refrigerator-sized mainframes that cost too much to maintain.

Recycling, reselling or rebuilding used computers keeps scores of small Southern California companies busy, along with several large firms such as upgrade specialist Kingston Technology Corp. in Fountain Valley and repair giant Cerplex Group in Anaheim. The business is booming because a proliferation of faster and more powerful computer programs are making some hardware obsolete for their owners.

"I lost track of how many roomfuls of computers I've hauled off," said Hulse, who keeps 14 employees and three trucks busy unbolting and unplugging PCs from offices across Southern California.

Buying in bulk from bigger organizations, such as Lockheed Corp., Southern California Gas Co. and UCLA, Hulse said he often gets the oldest PCs for as little as $10 apiece if he takes them away.

With the parts inside computers often selling for more than the machines are worth intact, Hulse said, the development of the salvage business was "inevitable."

"Everybody's gotten pretty conscious about what's in the computers," Hulse said. "It used to be where I'd be going through people's trash, but now I wouldn't find much."

Hulse is near the bottom of a chain of businesses whose work begins when computer owners are faced with computer integration, or software problems that make getting rid of a machine prudent.

Some companies, such as Irvine-based Taco Bell donate obsolete machines to schools or charities. But many used machines will be sold in the resale market, valued at about $2 billion year. The buyers are small business owners, parents looking for an inexpensive machine for young children and college students. Many of the sellers are companies like Irvine pharmaceutical maker Cocensys Inc. Fred Anson, Cocensys information systems manager, says he can't wait to boot a few machines out his company's door. Anson says he has trouble getting the company's nine Apple computers to work with 104 other machines running on the IBM-compatible operating system.

"I want them out of the building, period. They're too hard to integrate," he says.

While companies in Cocensys' predicament have taken considerable depreciation on the machines, a network of middlemen has sprung up in Southern California to find ways to add value to used equipment.

They range from small parts operators such as Oscar De La Garza--whose four-employee business, Dela Computer Marketing in San Clemente, had revenue of about $800,000 last year--to Aurora Electronics Inc., an Irvine firm formed two years ago that did $130 million worth of business in fiscal 1994. Both sell parts and components, and work with repair and service companies.

"I try to stay in the mid-range (computer) market, since the PC parts have gotten to be so cheap," said De La Garza. "You could say we're supplying almost the same parts that IBM can get you . . . we try to have a faster turnaround, though."

Though far bigger, Aurora Electronics was founded with a similar goal of helping users extend the life of their machines, said Bob Allison, Aurora's chief operating officer.

"When you go to tell a customer how they should cope with older computers, there's really no right answer except there are a lot of ways they can do it. That's what makes the business work."

Bill Klein, founder and chief executive of the Cerplex Group Inc., in Anaheim, said the used computer market resembles the auto industry, with all shades of support services, parts and salvage companies.

From its founding in 1990, Cerplex has grown to about 1,500 employees worldwide--450 in Orange County--and it estimates nearly $130 million in revenue this fiscal year, according to Klein. The company has benefited from growing demand for computer-repair services from companies that don't want to part with older systems.

"We're doing a lot of the same things you'll see auto-parts companies doing," he said. "It's taking old hardware back from the field that's either broken or out of service, and tearing it apart for parts or reconditioning it as spares."

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