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The Wall Street roller coaster ride was recently personified by Avnet's stock performance on Aug. 10. After reporting stellar earnings in the morning, the distributor's stock increased more than $2 per share. But by the end of the day, that euphoria was gone and Avnet shares closed only a penny higher than the day before.
The next day, CRN's Scott Campbell spoke with Phil Gallagher, global president of Avnet Technology Solutions, about his company's performance, how the fluctuating economy might impact business and, of course, what would any exchange with an IT executive be without talking about the cloud. The following are excerpts from the conversation:
With the Wall Street woes of the last several weeks, have you seen any impact on the business yet, in terms of orders and IT projects being pushed back? Or do you expect that to happen as a result of the economic turmoil?
From an [Avnet Technology Solutions] perspective, globally, we are projecting just south of the low end of our normal seasonality for the quarter. We're forecasting 5 to 7 percent down from the [last] quarter. We were asked a lot [by Wall Street executives], based on the market, what's happening to business. As we sit here today, without calling 1,000 VARs and 50 suppliers, we do think it's a bit different than 2008. There's not the tightening for capital or cash that there was in 2008. We do not see the credit crunch there right now. Everything I've read the last few days, I did talk to some partners and suppliers, they're looking at investments to continue to be made.
They're going to be in the data center, around virtualization, around storage, all for productivity and efficiency. There may be an effect but I do see corporations still going to look at investments in IT to drive more efficiency. We did OK in July with bookings relevant to previous benchmark numbers and August is looking pretty healthy right now. We can't predict much beyond that but we stay optimistic and realistic to market conditions.
I was talking to a VAR last week and he noted that in the 2008 downturn there was no cloud computing. That is, there was no technology that was still able to drive sales because it provided big productivity and cost-efficiency gains despite macro-economic challenges. That's happening this time around so he was more optimistic. Do you agree with that?
In areas like a PC refresh, that might slow down a little. But take cloud; what are the big [reasons] for cloud. First, it's hot, sexy. Second, it reduces risk and enhances efficiency and reduces cost. Better we educate the market on what cloud can do for them. That gives more pop for us and our suppliers to provide that need. The big thing still will be the education factor.
Next: Even Proprietary Servers Saw Growth
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