Synnex Q3 Beats the Street

Synnex posted strong gains for Q3 after market close on Monday, beating Wall Street estimates in its second quarter of double-digit growth.

The Fremont, Calif.-based distributor earned $14.4 million, or 44 cents per diluted share, up from $13.8 million, or 43 cents per diluted share for the same period last year.

Revenues were $1.76 billion, up 11 percent over last year's Q3 revenues of $1.59 billion.

The company had expected between $1.70 and $1.75 billion, and analysts polled by Thompson Financial expected to see earnings of 46 cents per diluted share on revenues of $1.74 billion, showing 9 percent growth.

Synnex recorded a charge of $2.7 million, $1.7 million net of tax, for the restructuring and consolidation of its Canadian operations after acquiring the Redmond Group of Companies and a logistics facility in the second quarter. It also received a $1.1 million benefit as the result of an income tax audit coming to an end.

"We made great progress with our results for the third quarter of 2007," said CEO Bob Huang to analysts on a conference call following the release of the company's third quarter results. "Once again we accomplished a strong performance in our core distribution services."

Overall demand in the distribution space was as expected, he said, and customer and product segments were not out of line with historical patterns or the marketplace, he said. The company enhanced its services business with its recent acquisitions including Link2Support and PC Wholesale.

He also told analysts that uncertainty in the economy could hurt IT product demand in 2008 in the United States.

The distributor is expecting earnings between $17.2 million, and $17.9 million or between 52 and 54 cents per share on revenues between $1.88 and $1.93 billion. Shares were trading at $21.15 at market close on Monday.

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