Q&A: John Paget, global president of Avnet Technology Solutions
October 25, 2007 4:35 PM ET
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Avnet had another strong quarter as it kicked off fiscal 2008, posting earnings of $105.5 million, or 69 cents per diluted share on $4.10 billion in revenues, up 12.3 percent from the first quarter of 2007. Sales of the Phoenix-based distributor's Technology Solutions division made up $1.61 billion of the total revenue for the quarter, up 32.5 percent over last year due to the company's successful acquisitions including Access Distribution.
Sales were strong in Asia and EMEA, but sales in North America slumped 5 percent for the quarter.
After the company announced its results, John Paget, global president of Avnet Technology Solutions spoke with Channelweb.com to talk about where he sees the market going and how Avnet plans to remain competitive in North America.
Where did you see strong growth in the Technology Solutions division?
I think it's going to be the same places that you witnessed it. Certainly the industry standard server product is up, so that means our virtualization and consolidation solution is going very well. Networking for us has been up. Security for us has been up. We've had a very great performance with some display product that we have that is very unique in Europe, so that's a really good piece there. Overall I would say: networking, security, wireless, industry standard servers are all doing very, very well.
How do you explain sales in the Americas dropping 5 percent?
It's a difficult market. It's a market where -- you've certainly read some of the earnings from some of the big manufacturers that we look to. It's a market where you're starting to see a transition. You have a transition going on with the product sets, and we've been able to maintain as products transition form the Unix market into the industry standard server market, we have been able to maintain our margins, which we think is the real answer there.
Certainly you don't have the same revenue production, but as we focus again on value-based management, we're maintaining the operating margins, in fact improving the operating margins as we go forward. That's all about creating the right kind of solutions and the right kind of tools and coming along side our resellers and surely adding value there.
Why do you think there is a shift away from the Unix server?
First of all, I think it' something that's been going on for six or seven years. I think it's a phenomenon that happens as people start to manage their companies with value-based management as well. It's something that for many years we didn't believe was going to happen and then it start transitioning. As industry standard servers create this value proposition and in fact create the situation where in many cases they can be as bullet-proof as the Unix type server you're going to see more and more companies transition that way.
That does not mean however that the Unix server goes away. That's generally the thing someone says. Gee, what's going to happen to your business? In some cases we're actually seeing some growth in some of the Unix platforms?
Next: Areas Of Growth
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