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Tech Data Brings Home The Bacon In Q3
While
Wall Street’s invebanks wither under the growing credit crisis, IT
distribution powerhouse Tech Data nearly quadrupled its quarterly
profits over last year’s Q3 numbers, bringing in $40.9 million, or 73
cents per share, up from earnings of $9.6 million, or 18 cents per
share, last year during the third quarter.Last year’s numbers were
affected by a restructuring charge that knocked earnings down by $6.1
million and a consulting fee of $2.8 million as Tech Data restructured
its European operations. Without these hits, the Clearwater, Fla.-based
distributor brought in 33 cents per share in its third quarter last
year.Revenue came in at $5.92 billion, up 9 percent from $5.43
billion in the same period last year.According to a poll of analysts by
Thompson Financial, Wall Street expected earnings of 60 cents on $5.88
billion in revenue.For CEO Bob Dutkowsky, the quarter showed that the
company’s initiatives, including an increased focus on the SMB market,
are paying off.”It was a very solid quarter for us coming off of a very
solid Q2,” he said. “On all fronts we thought the quarter was very
positive. We’re happy with the performance of the Americas business.
Canada continued to perform well. Latin America performed well. I wish
I could tell you it was some magical thing, but the secret sauce for
tech data this quarter was solid execution.””Clearly, our overall
execution as a company is improving. We’re buying the right products.
We have the right products on the shelf. The logistics engine is
running well,” said Dutkowsky.Improvements in the Americas can be
connected back to Tech Data’s reorganization of its sales team earlier
this year, he said. “That clearly is connecting Tech Data closer to
more customers, and the more tightly connected we are the more business
we have the opportunity to compete for.”The distributor saw
European sales increase, although it expects them to decrease in the
next quarter, compared to the fourth quarter of fiscal 2007. While it
forecasts $6.35 billion to $6.50 billion in revenues for the fourth
quarter, Dutkowsky said he doesn’t know if the business and the IT
sector in general will be hit hard by the credit crunch threatening
Wall Street.”I think it would be nave to think that all of the turmoil
in the financial markets is not going to spill over into the tech
space,” he said.”I think also that a lot of the impact of the market
turmoil is going to affect the enterprise customers more, the big
companies, big banks, big manufactures, and that’s not where we sell. I
think Wall St. turmoil doesn’t get to Main St. quite as fast and we’re
focused on Main St. more,” Dutkowsky said.However, the rising price of
oil and therefore gasoline is having an impact on the distributor’s
bottom line.”We ship $70 million of products every day and most of that
goes by truck, but as the price of gas goes up the price for us to do
business goes up and that’s going to impact our business in the short
term and the long-term,” he said.On which products will the company be
hedging its bets as it looks towards 2008 and its fiscal year 2009?”I
think it’s just the standard products we know and love today, whether
it’s laptops or wireless technologies, security products, storage or
servers — the basic IT building blocks,” he said. “I don’t see them
slowing down any of their momentum or importance, but I think some
emerging technologies will continue to grow and become more important
like blades, virtualization technologies — anything that has the
concept of virtualization wrapped around it will be an important
architecture.”Also making the list are physical security products,
unified communications solutions, Pro/AV products and open source
software, he said. “In every one of those cases Tech Data has an
initiative. As the next generation of technology evolves we’re well
positioned to take advantage of that.
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