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Fingerhut buys into Hand
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February 24, 1999: 12:20 p.m. ET
Stake in online computer retailer extends network of Web store holdings
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NEW YORK (CNNfn) - Just two weeks after being bought out by Federated Stores, direct retailer Fingerhut Cos. put its merger premiums to work Wednesday, buying a 19.9 percent stake in Web computer retailer Hand Technologies.
"Hand Technologies and Fingerhut are throwing down the gauntlet to the online and hardware industry, to win the computing hearts and souls of the mass market," Hand Technologies CEO Andrew Harris said.
Fingerhut (FHT) will pay an undisclosed sum for the tie-in, the company's first since agreeing to the $1.7 billion cash buyout by department store operator Federated (FD) on Feb. 11.
At that time, Fingerhut President William Lansing told CNNfn that the capital infusion would help Fingerhut "continue to invest in the Internet space" by acquiring stakes in diverse electronic retail companies.
With the Hand holding, Fingerhut now has minority stakes in seven Web stores ranging from PC Flowers & Gifts to outdoor retailer The Zone Network, and the company said it is working on other such shareholder partnerships.
"We will continue to invest in and partner with companies where, together, we can give our customers the best buying and support experience available on the Web today," Fingerhut Chairman and CEO Ted Deikel said.
Fingerhut plans to use its relationship with Austin, Tex.-based Hand to create a new channel for selling computer equipment and services directly to the mass market.
Started in 1996 by former executives of direct computer behemoth Dell Computer (DELL), Hand currently employs 4,000 computer consultants to assist customers looking to buy machines from manufacturers like IBM (IBM), Compaq (CPQ) and Hewlett-Packard (HWP).
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If Fingerhut can achieve even part of its strategic goal to become "nothing less than to be the major retailer on the Net," it stands to win a healthy share of the electronic retail marketplace, which is now forecast to bring in as much as $1 trillion in the next few years.
In particular, analysts say direct retailers -- including not only Fingerhut but such diverse competitors as Lands' End (LE), Williams-Sonoma (WSM) and Spiegel (SPLGA) -- might be set for a big win online.
"I think that the direct marketers are actually positioned to be among the biggest beneficiaries of the marketing capability of the Internet," said Kevin E. Silverman, director at ABN AMRO, in a recent interview.
Fingerhut shares were down 1/16 at 24-7/16 in morning trading Wednesday, while merger partner Federated was up 1-1/16 at 38-1/4. 
-- by staff writer Robert Scott Martin
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