Insight, PC Connection Shares Fall

PC Connection shares fell 22 cents to $7.16 Thursday after the distributor beat Wall Street earnings expectations but fell short of revenue targets.

Net income for the Merrimack, N.H.-based solution provider was $2.3 million, or 9 cents per share, compared with $1.4 million, or 6 cents per share, in the second quarter last year.

Revenue for the quarter was $335.3 million, a 4 percent increase from last year's $321.6 million for the same period.

Analysts had expected earnings of 8 cents per share on revenue of $340 million.

"I am encouraged by our second-quarter results, which showed increasing sales, rising gross margins, and growth in earnings per share," PC Connection Chairman and CEO Patricia Gallup said in a statement.

"Our first-quarter initiatives to improve gross margins along with our increase in net sales produced the strong earnings per share growth in the second quarter. As the results show, we are working harder and smarter to both better serve our customers and run our business more efficiently."

Revenue for PC Connection's SMB segment increased 4 percent from the second quarter of 2003 to $194.1 million. Sales to government and education customers declined 15.6 percent compared with the second quarter of 2003 to $63.3 million. Sales to the federal government declined 65 percent year over year, but sales to state, local and education customers increased 20 percent year over year.

Sales to large corporate account customers increased by 30 percent from the second quarter of 2003 to $77.9 million.

Notebooks and PDAs accounted for 20.1 percent of sales in the quarter vs. 20.6 percent last year.

Desktop and server computer systems accounted for 13.8 percent of sales, compared with 14.1 percent last year. The average selling prices of computer systems decreased 3.7 percent in the second quarter of 2004 vs. the corresponding period a year ago.

PC Connection expects to receive a new GSA Schedule, which will help regain sales to the federal government, Gallup said.

Meanwhile, Insight's shares fell 49 cents to $15.46 per share despite not reporting until after market close. Its second-quarter earnings didn't meet Wall Street estimates of 28 cents per share.

The Tempe, Ariz.-based solution provider reported $13 million in earnings, or 26 cents per share, on $769.1 million in revenue for the second quarter. The results compare with $8.2 million, or 18 cents per share, in the year-ago quarter.

Revenue was $769.1 million in the quarter, a 6 percent increase from $725.4 million in the same period last year.

"I am pleased to report that we posted year-over-year net sales growth of 6 percent and sequential sales growth of 5 percent," said CEO Tim Crown in a statement. "This growth is the result of our efforts to move beyond the success of our internal initiatives and focus even more of our efforts on the customer."