Avnet is looking to acquire capabilities around software, services and converged solutions as demand for data center, networking and storage products continues to climb.
In its earnings call Thursday, the Phoenix-based distributor said year-over-year revenue for its third quarter ended March 28 was $6.74 billion, a 7 percent jump once changes from foreign currency exchange rates were factored in. That, however, fell short of analysts' estimates of $6.85 billion.
Quarterly non-GAAP earnings fell 0.4 percent, to $143.5 million, or $1.04 per share, missing analysts' expectations of $1.07 per share.
Investors sent Avnet's stock down 4.4 percent in trading Thursday to $43.49 on the quarterly results, which were released before the market opened.
"The prospects are positive, and we are very close to meeting our long-term targets," said Patrick Zammit, president of Avnet's Technology Solutions division, during the company's earnings call. "I'm expecting more improvements to come."
The Technology Solutions division enjoyed 4.3 percent global sales growth on a constant currency basis, to $2.52 billion, with strong data center, networking and storage demand in the Americas and Europe overshadowing weak computing component sales -- which include processors, servers and CPUs -- in Asia.
Avnet CEO Rick Hamada assured investors that mergers and acquisitions are still an important part of the company's growth strategy, though he acknowledged that Avnet is taking more care to ensure the deals align with the company's long-term growth strategy.
"We are being more selective and more strategic with the acquisitions we're making," Hamada said.
Avnet has not had a major technology solutions acquisition since it picked up cloud and data center automation services provider Seamless Technologies in June 2013. That's in stark contrast to fellow distributors Arrow and Ingram Micro, which have both made several IT-related acquisitions in recent months.
Avnet has historically been extremely active in M&A, making upward of 85 acquisitions from 1993 to 2013. Going forward, Hamada said, Avnet will pursue deals that align with already articulated long-term growth plans, which include technology areas such as social, mobility, analytics, cloud, converged solutions, software and services.
"We are open for business when it comes to M&A," Hamada said.