CDW Sees 4Q Profit Fall Despite Sales Gain

CDW's stock stumbled Friday after the direct marketer reported a nearly 24 percent year-over-year decline in fourth-quarter profit.

CDW earned $53.6 million, or 67 cents per diluted share, in the quarter ended Dec. 31, 2006, compared with $70.5 million, or 86 cents per diluted share, a year earlier. The news sent CDW's stock down $5.10, or 7 percent, this morning to $65.65.

The Vernon Hills, Ill.-based company, however, reported a 13.5 percent gain in fourth-quarter sales to $1.82 billion, from $1.61 billion in the year-ago quarter.

The results include a one-time $25 million expense, $15.4 million after taxes, related to a litigation settlement of CDW's 2003 acquisition of some assets of Micro Warehouse. Excluding the charge, earnings per share were 86 cents.

Financial analysts had projected CDW's fourth-quarter earnings at 91 cents per share on sales of $1.81 billion, excluding charges, according to Thomson Financial/First Call.

CDW said sales from its acquisition of Berbee Information Networks accounted for about $100 million in the fourth quarter.

Corporate sales accounted for about $1.16 billion, a 3 percent increase from the year-ago quarter, and public-sector sales were $551.3 million, a 15.4 percent increase, according to CDW.

For its 2006 fiscal year, CDW reported a profit of $266.1 million, or $3.30 per diluted share, on sales of $6.79 billion. In 2005, CDW earned $272.1 million, or $3.26 per share, on sales of $6.29 billion.

"In 2006, we expanded our platform for growth, which resulted in a challenging and productive year for us. As we drove to implement change across several areas of our business, we still delivered record sales and diluted earnings per share," CDW Chairman and CEO John Edwardson said in a statement.

CDW's key accomplishments in 2006 were the geographic alignment of its medium and large corporate customers, the acquisition of Berbee, double-digit sales growth in the public-sector market and continued infrastructure investment, according to Edwardson.

"As we enter 2007, we will focus on leveraging our enhanced infrastructure and increasing our ability to profitably outpace market growth," he said in a statement. "Central to our growth strategy is continuing to improve our unmatched service to customers. We are very pleased with the addition of Berbee, which has significantly increased our ability to offer customers a single source for their core technology needs and more advanced IT services and solutions. We are excited about the opportunity to scale Berbee's business processes to generate additional growth."

Corporate sales for the 2006 fiscal year were $4.51 billion, a 2.3 percent year-over-year increase. Public-sector sales totaled $2.16 billion, a 15 percent increase.

Tweet

   

More Channel Programs