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Acquisitions Spur Strong Q2 for Arrow


By Jennifer Lawinski, ChannelWeb
1:29 PM EDT Wed. Jul. 25, 2007
Arrow Electronics posted strong second quarter results on Wednesday, attributing its growth to its recent acquisitions.

The Melville, N.Y.-based distributor of computers and components earned $99.2 million, or 79 cents per diluted share, with sales of $4.04 billion, up 17 percent over last year's Q2 earnings of $92.8 million, or 76 cents per diluted share.

According to Thompson Financial, analysts anticipated earnings of 82 cents per diluted share on sales of $4.01 billion.

On a pro forma basis, sales were up 5 percent over last year when the company's acquisitions are taken into account. Arrow bought distributors Alternative Technology, KeyLink Systems Group and U.K.-based InTechnology in recent months.

Arrow's Enterprise Computing Solutions business posted sales of $1.27 billion, up 78 percent over Q1 and 103 percent over Q2 2006. Industry standard servers, storage, software and services were all strong for the distributor, Arrow ECS President Kevin Gilroy told analysts on Wednesday's call.

"We have major cross selling initiative in place that is starting to pay off," said Gilroy. "Security and virtualization software is growing by leaps and bounds, [and] we're seeing more solutions being sold than point products."

On a pro forma basis, sales increased 22 percent over last year.

"Our strategic transformation in global ECS is producing impressive results as we grew sales at almost four times the rate at which the market is expected to grow. Global ECS now represents approximately one-third of our business, further diversifying and reducing the volatility of our revenue stream," William Mitchell, chairman, president and CEO of Arrow, said in a statement. "By further executing on significant cross-selling opportunities, pursuing our strategic focus on the mid-market and leveraging our unique software capabilities, we expect to continue to outgrow the market. With increased scale, scope and flexibility, our strategy is proving out every day with our customers and vendors."

Arrow anticipates sales between $3.75 billion and $4 billion in the third quarter, and it expects normal seasonality in both its components and ECS businesses. Third-quarter earnings are expected to be between 76 cents and 82 cents per share.


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