Tough Day On Wall Street Even Worse For Channel Stocks

Shares of distributors Ingram Micro., Arrow Electronics, Avnet and Synnex each declined more than 10 percent Thursday, about twice the rate that the Nasdaq and Dow Jones Industrial Average fell, 5.1 percent and 5.3 percent, respectively.

Synnex posted the biggest decline, falling $1.42 per share, or 13.4 percent, to $9.16. Ingram Micro fell 12 percent to $9.29, Arrow fell 12.2 percent to $11.82 and Avnet fell 10.3 percent to $12.10.

Direct marketer PC Connection, fell 10.9 percent to $3.18 per share.

Several other channel companies also posted declines, including Tech Data (9.2 percent to $15.99) and ScanSource (4.2 percent to $14.82). Public VAR stocks didn't fare much better. Agilysys fell 8.7 percent to $2.09 and Insight Enterprises fell 4.7 percent to $3.63.

Agilysys reported a 12-percent decline in revenue Thursday for the second fiscal quarter, which included a 17 percent decline in hardware sales. The Boca Raton, Fla.-based solution provider joined a growing list of companies that no longer provide guidance for the current quarter.

"[Agilysys] shares have suffered in recent months, falling an alarming 77 percent since September vs. a 35 percent drop in the NASDAQ," wrote Brian Alexander, managing director of equity research, technology hardware, distribution and EMS for Raymond James & Associates, in a report on the company. "While we remain encouraged by management's recent progress on shedding legacy costs, we would like to see continued traction on these efforts as well as improving end-market demand before getting off the sidelines."

According to Reuters, the S&P 500 fell to its lowest level since October 2002, while other U.S. indexes and benchmarks in Europe and Asia set fresh 5-1/2-year lows. Two out of every five issues traded on the New York Stock Exchange plummeted to 52-week lows, according to Reuters.