Avnet: Paget Ouster 'Not An Indictment of Strategy'

Avnet COO and Senior Vice President Rick Hamada told Channelweb.com Thursday that the impending departure of John Paget as global president of Avnet Technology Solutions was not a matter of remaking Avnet's strategy so much as the result of missed numbers.

"I wouldn't say [the results] are frustrating. Obviously, the results aren't a disaster; we didn't go from making money to losing money. But we did have some very clear objectives in mind, and we have not been able to achieve those," Hamada said.

"John is a scholar of the industry and very knowledgeable, and I have a lot of respect for him. We [Avnet] have commitments to long-range planning targets. We manage groups by region and each is held accountable -- it all feeds up and that's what Avnet is, how it's managed. As John and I have been working the last couple of years, there have been some very specific, very clear mutually agreed upon goals and objectives and a trajectory for the elements of the business."

Avnet announced on Monday that Paget would step down effective March 2, and that Philip Gallagher, the current president of Avnet Electronics Marketing, would assume the role. Hamada is the acting president of the Technology Solutions side during the transition period.

"John and I had a conversation earlier in January and came to the conclusion on the decision," Hamada said. "It was a difficult decision. It is not a one-quarter knee-jerk reaction -- it's a carefully considered decision based on a sequence and pattern of performance that we couldn't continue. There is disruption for the Tech Solutions team, but part of my message both to them and externally is that this is not an indictment of strategies in Technology Solutions. It's just about performance. We're trying to manage the multiple dimensions of change and give [team members] comfort that this is not an indictment of strategy."

Paget could not be reached by Channelweb.com for comment on Thursday.

Hamada said Paget would "help facilitate" Gallagher's transition, confirming Paget and Gallagher had spoken and Paget would assist Gallagher in Gallagher's 100-day plan.

"John has thus far reacted very professionally and is being very accessible and open and participatory," Hamada added. "It is necessary for an effective transition."

Avnet reported double-digit declines in profit and revenue for the second quarter of its fiscal year 2009. Hamada said Avnet would continue to make decisions "quarter to quarter" as the economy plowed its way through a recession.

"If it's a nine-inning ball game, well, I don't think it's in the first inning," Hamada said, referring to the downturn. "But even if I called the seventh or eighth, it could go to extra innings, you know? We're making decisions quarter to quarter. Next quarter we're going to learn some more."

In terms of specific technologies and services, Hamada reiterated that virtualization and unified communications were "at the top of everyone's list," and said he believed there were solid plays for open-source systems despite not seeing a "whole lot of adoption at this point."

On the downside, proprietary servers are "under a lot of pressure -- not gone, but still under pressure." He declined to name strengths and weaknesses and what he was seeing for VAR preferences in particular vendor platforms.

In the coming year, Avnet Technology Solutions will continue exploring other global opportunities, Hamada said, especially in the so-called "BRICK" countries (Brazil, Russia, India, China and Korea).

In December, the distributor launched a value-added distribution business in China and also announced a joint venture with the Sanko Group in Turkey.

"In [Turkey] we have modest expectations in the short-term but economic growth is projected to be nice over there and commensurate with growth in IT spending," he said. "We announced it in December and we're still waiting for it to clear a few government [approvals]. When it does, I think we can be more open about it."

Specific to vertical markets, Hamada adheres to the notion that there's a lot of opportunity up for grabs in health care and government. Avnet plans to increase emphasis on its HealthPath University training program to help VARs sell to health-care customers.

"Health care is a tremendous combination of opportunities," Hamada said. "It sounds like one big industry but it's actually multiple big industries, each with varying degrees of opportunity and regulation. A lot of prognosticators believe health care and government are going to be growth markets so our focus is on networks of partners and what can we be doing to deliver scalable solutions."

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