Print

Email story

Comment

Email editor

Tech Data claws its way back into black

Rebounding from a huge loss in the previous quarter, the Clearwater computer reseller posts a profit of $9.6-million .

By Kris Hundley
Published November 22, 2006

After only about eight weeks on the job, Tech Data Corp.'s new chief executive, Robert M. Dutkowsky, got to deliver good news Tuesday during his first quarterly conference call with investors.

The Clearwater computer reseller's sales in both the Americas and Europe exceeded expectations for the three months ended Oct. 31, up 7 percent to $5.4-billion, compared with $5.1-billion a year ago.

And though earnings of $9.6-million, or 18 cents a share, were below year-ago net income of $23-million, or 40 cents a share, they were at least in the positive column. That was a major improvement over the company's stunning $155.5-million loss for the quarter ended July 31, the result of extraordinary one-time charges and anemic European sales.

What's more, Tech Data said it has finally completed its costly operations restructuring in Europe, the Middle East and Africa, responsible for $8.9-million in charges during the latest quarter.

"This is a good quarter for the company, but bottom line, we're not declaring victory," said Dutkowsky, who succeeded longtime chief executive Steve Raymund on Oct. 2. "It will take some time for all the hard work and effort put out over the last 18 months to solidify and mature. Then we'll see even better performance. The rebirth of Tech Data is not complete."

Investors embraced the results, with the stock closing Tuesday at $41.67, up $1.67. Shares have been trending up since hitting a 52-week low of $32.10 in August, but are still below the year's high of $42.65.

Andy Hargreaves, analyst with Pacific Crest Securities in Portland, Ore., applauded Tech Data's turnaround. "The growth in the EMEA Europe, Middle East and Africa region was the best in two years," he said. "The company seems to be on its way up in terms of operating performance, and that allows it to pursue growth opportunities."

Dutkowsky, who headed three tech companies and spent 20 years at IBM before joining Tech Data, left little doubt Tuesday that growth is on the agenda.

While the company continues to try to improve margins on its existing product mix, Dutkowsky wants to move Tech Data into new products and new geographic markets.

"What I've heard from our business partners is that Tech Data is their strategic route to market for the technology we deliver today and the technology they envision bringing to the market in the future," he said.

Dutkowsky, 51, has made no secret of his desire to see Tech Data topple the world's No. 1 computer products distributor, Ingram Micro.

"I think the company has been internally focused over the last few years," he said of Tech Data, which has 100,000 customers and nearly 8,000 employees worldwide. "With the completion of the restructuring, we have the opportunity to turn outward and attack the market with our strength."

Kris Hundley can be reached at hundley@sptimes.com or (727) 892-2996.

[Last modified November 21, 2006, 23:35:47]