Ingram CEO: We Have The Resources To Support Citrix

Ingram Micro Inc. topped Wall Street estimates when it disclosed its second-quarter financial results on Thursday, but the biggest news surrounding the company came earlier in the day when Citrix Systems announced that it was cutting all its North American distributors, save Ingram.

Greg Spierkel, CEO of the Santa Ana, Calif.-based distributor, spoke with ChannelWeb's Scott Campbell about Citrix's move, selling in a tough economy, and what products are hot right now.

What are you guys doing for Citrix that the other distributors were not doing?

We've been working with Citrix, not for that long, a couple of years, but in that time we've had a good relationship. Obviously, we've done a good job for them to the point they frankly feel they can do a better job with just us providing tech support and field support, which has been a big requirement of theirs given the nature of their products. We put a strong team in behind them over the last year, and we're growing in market share. They felt they could get more attention with what we have with them and the resources we have. We were getting a much better response [from VARs] with our capabilities. It's a big positive for us.

We've seen some other moves in the last few months with vendors paring their two-tier distributor ranks. Is that becoming a trend?

I would not say it's a trend. Where it seems to be happening the most is with vendors that are small to medium size. If I want to be a real strategic vendor partner and get the focus I need, but I only have, say, $50 million a year to split among four distributors, I don't know if I can get the mind share and resources I need that a two-tier distribution partner can provide. It's typically midsize to smaller vendors who can't give [VARs] the tech support and product certification support to a manufacturer. I'd like to see more reduction for everyone in the channel. It makes for a more positive financial situation and even if it means us losing some franchises, it would be a more healthy dynamic in distribution overall.

With demand seeming to tighten, what advice do you have for solution providers looking for new ideas to sell in a tough economy?

Of course, buy more from Ingram Micro [laughs]. But I would say the real message in there is to leverage your partners, leverage infrastructure that exists elsewhere rather than build yourself in tough times. Using services that we have or others, can save a small business an investment. It's the same thing with headcount management. Business can slow or dry up quickly. We have services in hiring, using outside partners to do that. That's an area from a small biz perspective, where you can get help. Also, don't lose sight of cash flow management. It's too easy to get customers asking you to stretch payments out too long. If you are too supportive, you can get caught yourself. While it may be a way to build a relationship, your business is also important.

Regarding your own performance, sales in North America increased 7 percent in the second quarter, but that included the acqusition of DBL. Excluding that, what was your organic growth?

The [DBL impact] was tiny. Keep in mind that DBL was a $300 million business last year when we bought it. In this quarter, we did $8.8 billion. So if you think of DBL and divide by four. It's a very tiny percentage. It's probably less than one percent of impact of revenue growth. Most of the growth is organic.

How do you feel about your 7 percent growth compared to your competition? Would you have liked it to be higher or were you OK with it because it meant you walked away from more unprofitable business?

We definitely walked away from tough business that was not really profitable. We're very disciplined. Our [7-] percent growth, on a global level was ahead of overall IT market growth. Most numbers points to 5 percent [global] growth this year. Would we like more market share? Yes. Could we go after more? Yes. But we are disciplined around profitability for the right types of bids to go after. They are more important to us.

What product categories were especially strong in the quarter?

Systems outgrew the overall market, with PCs and servers on a global level. Not by a lot, but it's also 25 to 30 percent of our overall revenue, so it was good growth. That also tells you things around mobility, mostly laptops, where we saw robust growth on a global level. That's been the pattern for several quarters. We also saw healthy growth around things like navigation devices and virtualization where there's still a good understanding for improving utilization of servers and client-level devices. That's still in the early stage of deployment with a lot of companies, so we expect that to continue at least for the next couple of quarters.

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