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Dim forecast drops Tech Data stock
By SCOTT BARANCIK
Published March 9, 2006
Tech Data Corp. suffered its biggest one-day stock plunge in nearly two years after the Clearwater company delivered a disappointing earnings forecast Wednesday.
Citing competitive pricing and uncertain demand, the world's No. 2 distributor of computer products said it expects to earn 28 to 34 cents per share in the first quarter of its 2007 fiscal year, excluding one-time charges.
Wall Street analysts had predicted Tech Data would earn 59 cents, on average.
The company's stock dipped as much as 15 percent Wednesday before closing at $36.42, down 11 percent, or $4.55 per share.
In an interview, chairman and chief executive Steve Raymund said analysts may have expected Tech Data's European restructuring plan to deliver quicker results. The company is in the middle of a $40-million to $50-million project aimed at increasing efficiency, market share and profit margins in the region, which accounted for 54 percent of its global revenues last year.
"I think that the market put us in the penalty box a little bit," Raymund said. "Clearly, the onus on us is to bounce back and show them what this company and management team are capable of." He added that the company is "far healthier" than in mid 2005, when its European group was losing money.
Before Wednesday's forecast, all but one analyst who monitors Tech Data rated its stock a "hold" or "sell." By contrast, half of the analysts who follow rival Ingram Micro consider the Santa Ana, Calif., company a "buy."
Tech Data disclosed results for its 2006 fiscal year, which ended Jan. 31. The company's resumes climbed 3.8 percent to $20.5-billion, its first time above $20-billion since the Internet craze crested in fiscal 2001 and more than any other Florida public company.
Profits, however, fell 84 percent in fiscal 2006 to $26.6-million, largely because of expenses related to Tech Data's European restructuring costs and a one-time tax issue.
In the fourth quarter ended Jan. 31, the company's net income fell 50 percent to $29.5-million, while its revenues edged down 1.3 percent to $5.5-billion.
Scott Barancik can be reached at barancik@sptimes.com or 727 893-8751.
[Last modified March 9, 2006, 03:00:34]
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