Carlos Slim couldn't save CompUSA
The world's richest man has an impressive investment track record, but the imminent shutdown of CompUSA shows that even Slim can trip up.
(Fortune) -- Carlos Slim, the richest man in the world (net worth: approximately $59 billion), has made his fortune investing in undervalued companies, patiently waiting for them to rebound.
He did it the early 1980s, buying stakes in companies in his native Mexico during a financial crisis. He did it in 1997, buying a 3% stake in Apple Computer (Charts, Fortune 500) for a mere $17 a share - within a year the stock had more than doubled. (He has long since sold.) And he struck gold again in 2002, when he bought bonds of then-bankrupt MCI for pennies on the dollar, a move that paid big dividends when Verizon (Charts, Fortune 500) acquired the ailing long-distance carrier.
So it seemed like a good bet when the savvy investor first invested in CompUSA in 1999 and the following year acquired the underperforming computer chain for about $800 million. But CompUSA proved to be a rare misstep for Slim. Under his ownership, the company changed management teams, shuttered stores and tried to bolster its online strategy, to little avail. Late Friday, the company announced its sale to an affiliate of Gordon Brothers Group, a Boston-based restructuring firm that said it will start winding down CompUSA's stores and sell certain assets.
Terms of the deal weren't disclosed, but it is a safe bet that this was not a moneymaker for Slim. Slim is best known for his investments in telecommunications. He controls almost a third of America Movil (Charts), a wireless company with a market value of about $113 billion. He also owns 82% of Carso Global Telecom, a holding company worth about $16 billion. (The largest asset: Telefonos de Mexico (Charts), the main phone company in Mexico.)
But Slim is no retail novice. As of this summer, he owned 10% of U.S. retailer Saks (Charts), whose shares are up 50% in the last two years. His Grupo Carso conglomerate operates various stores in Mexico, including a couple of music retailers and Sanborns, a popular department store that sells everything from consumer electronics to books to baked goods. Indeed, retail is in Slim's blood. His father, Julian, a Lebanese immigrant, opened a general store in Mexico. Julian also invested in Mexico during an inopportune time: He started buying real estate in downtown Mexico City during the 1910 Revolution.
So what went wrong at CompUSA? When Slim bought the company in 2000, he had hoped the stores would be a crucial way for consumers to learn about the Web. "Stores will still be necessary to sell products and services and to teach people how to operate in this new digital civilization," he told BusinessWeek in a 2000 interview.
That vision didn't exactly play out. U.S. consumers have adopted more of a "DIY" model when it comes to getting online. Slim in March told reporters: "We made a mistake with management" at CompUSA.
But perhaps the problem was one of passion. Slim has said he buys his ties at Sanborns and his shoes from Saks. He gets his wireless service from America Movil (son-in-law Arturo Elias Ayub recently said Slim even has started to send text messages). But he probably isn't a big patron of CompUSA stores. Slim doesn't use computers.