Tech Data CEO: Company Will Catch Up To the Competition

Tech Data is growing slower than rival broadline distributors Synnex and Ingram Micro, but CEO Bob Dutkowsky thinks the company is poised to gain ground.

Tech Data announced its 2006 earnings on Thursday, posting $21.4 billion in sales, up 4.7 percent from $20.5 billion the previous year. Last month, Ingram Micro reported 9 percent growth for the year, and Synnex, which recently expanded into the used and refurbished computer market with its purchase of PC Wholesale, saw double-digit growth from its distribution and contract assembly businesses in 2006.

But the Clearwater, Fla.-based distributor isn't content to lag in third place. It has plans to break out of its rut and expand its horizons.

Tech Data will be exploring paths for "organic growth," Dutkowsky said, through better execution of the company's current processes, geographies and business practices.

"I don't think that [Ingram Micro and Synnex] are having organic double that growth. They're buying things. They're adding on to the business model," he said.

Tech Data will also be exploring new business opportunities in new technology areas and new geographic regions, Dutkowsky said. Tech Data recently announced that it is moving in on the European cell phone market by partnering with U.K. distributor Brightstar.

"Cell phones in Europe will grow 12 percent next year, so there's your three-times growth rate if you're looking for a data point," he said. "The same thing goes for the Advanced Infrastructure Solutions division, AIS. Blades are the fastest growing segment of the IT space today, so AIS is focusing on bladed technologies, virtualization and high-end storage products. You saw that we just signed up PolyServe as a vendor on our line card. They have virtualization software and virtualization storage software to help us move into that fast-growing market segment."

The final piece of the puzzle will fall into place as Tech Data begins "walking way from some revenue streams," Dutkowsky said. "We're actually not booking business that's less profitable than business that we want."

The company grew 11 percent in the fourth quarter last year, but would have had higher growth if the number hadn't been brought down by nonprofitable customer and product segments.

"I think the storyline here is that the recovery of Tech Data continues," Dutkowsky said. "Our progress is measured. We have a strategy in place that we think will continue to deliver marked improvement in the performance of the company. Our recovery in Europe is well under way. We're pleased with the results, but we're not declaring victory by any stretch of the imagination. There's much more to be done here, and we're committed to continuous improvement as a company."