Tech Data Lowers 4Q Guidence But Meets Expectations

Tech Data said it expects fourth-quarter earnings of 53 cents to 58 cents per share, while Thomson Financial/First Call had projected net income of 64 cents per share.

"We track [market share closely, and we don't believe we are losing share. Our numbers reflect some softening in the market," said Steve Raymund, chairman and CEO of the distributor. "[Also, there are fewer shipping days and probably some [impact from the continuing evolution of [HP's strategy to PCs."

Tech Data met Wall Street expectations with earnings of $32.8 million, or 57 cents per share, for the third fiscal quarter ended Oct. 31. The distributor earned $28.5 million, or 51 cents per share, in the year-ago quarter, which included $7 million in special charges.

Tech Data has earned $103.2 million, or $1.77 per share, on sales of $11.73 billion through the first three fiscal quarters, compared with net income of $74.3 million, or $1.34 per share, on sales of $13.03 billion for the same period last year.

Raymund declined to detail the impact of HP's direct effort but said it was factored into Tech Data's fourth-quarter guidance.

"Clearly, there is some impact on our revenue outlook. But there is softness that extends beyond the HP program," Raymund said. "We sell more products than [just HP to a lot [more customers than [just direct marketers. Obviously, we try to sell as much as we can to whatever reseller will buy from us, and we try to support all the vendors in our portfolio," he said.

For its part, solution provider HCI Technologies expects a strong fourth quarter, but Rodney Martin, president of the Sterling, Va.-based company, said he is not surprised that other IT companies such as Tech Data are not seeing increased sales. "Some other [IT companies haven't seen the pipelines firm up yet," he said.