Bell Micro, Insight Headline Q1 Channel Stocks
1Q Channel Stocks
Bell Microproducts was the top-performing channel stock in the first quarter of 2010, but most of its increase is due to the distributor agreeing to be purchased by Avnet. Meanwhile, Wall Street was impressed with Insight's new CEO but five other channel companies saw their stocks fall during the first quarter. Here's a more detailed look at the results:
Bell Microproducts
March 31, 2010: $6.95
Dec. 30, 2009: $3.55
Change: 95.8%
Bell Microproducts had already had a strong first quarter on Wall Street when the San Jose, Calif.-based distributor agreed to be purchased by Avnet for $7 a share. Prior to the transaction, Bell Micro closed at $5.38, up significantly from its $3.55 close at the end of 2009. The company was also relisted by Nasdaq during the quarter after the SEC completed an accounting investigation that recommended no enforcement action take place.
Insight Enterprises
Mar. 31, 2010: $14.36
Dec. 31, 2009: $11.42
Change: 25.7%
Wall Street likes Ken Lamneck as the new CEO of Insight Enterprises. Lamneck, former president at Tech Data, took the reins on Jan. 1 at Insight and its stock improved steadily throughout the quarter.
In February, the company also reported strong fourth-quarter financials achieved under then interim CEO Tony Ibarguen. The results included net income of $17.4 million, or 38 cents per share, compared with a loss of $79 million for the same quarter last year. Analysts had estimated that Insight would earn about 20 cents per share.
ScanSource
Mar. 31, 2010: $28.78
Dec. 31, 2009: $26.70
Change: 7.8%
ScanSource shares jumped nearly 5 percent on March 1 after Raymond James and Associates upgraded the company's stock. And it kept going up over the next four weeks. News that Avaya had cut Ingram Micro and kept ScanSource's Catalyst Telecom as a distributor may have contributed to the company's performance on Wall Street.
Arrow Electronics
Mar. 31, 2010: $30.13
Dec. 31, 2009: $29.61
Change: 1.8%
In the first quarter, Arrow announced the creation of a separate business unit for its burgeoning professional services business in Arrow Enterprise Computing Solutions, a unit that will now focus on expanding those offerings for solution providers.
Areas of practice include education, support, consulting and managed services/cloud computing. Arrow has offered services for several years, often adding to its portfolio, but in a separate business unit, the distributor can better market and formalize the offerings, said Joe Burke, vice president of worldwide services for Arrow ECS and a longtime channel veteran charged with leading the new business unit. "The last time we launched a business unit, for storage, was in 2002. We've gotten enough traction, enough work, that it needs to be a separate unit," he said.
Ingram Micro
Mar. 31, 2010: $17.55
Dec. 31, 2009: $17.45
Change: 0.6%
Ingram Micro is losing its Avaya U.S. distribution relationship at the end of June, but Wall Street was more impressed with the Q4 numbers that Ingram reported in the first quarter.
Ingram earned $107 million, or 64 cents per share, on revenue of $8.81 billion for the quarter ended Jan. 2, 2010. The results compare with a $564.3 million loss in the fourth quarter last year, or $3.48 per share, on sales of $8.68 billion.
Avnet
Mar. 31, 2010: $30.00
Dec. 31, 2009: $30.16
Change: -0.5%
Avnet shares got a last-minute jolt in the quarter when the company agreed to buy Bell Microproducts. Typically, the acquiring company's stock takes a dip, but that wasn't the case for Avnet. Still, it wasn't enough to get shares back to their 2009 closing price.
During the first quarter, Avnet Technology Solutions launched a suite of services under its SolutionsPath program in the quarter, including assessment, design, implementation and managed services, mostly delivered by Avnet-badged employees, but will also include some third-party partners.
The distributor reported its second fiscal quarter earnings in late January, reporting $103.9 million in net income, or 68 cents per share, on $4.83 billion in sales for the fiscal quarter ended Jan. 2, 2010. Analysts had expected earnings of 59 cents per share on $4.55 billion in sales for the second fiscal quarter.
PC Mall
Mar. 31, 2010: $5.06
Dec. 31, 2009: $5.22
Change: -3.1%
PC Mall shares fell slightly during the first quarter, after the company reported in February that its fourth-quarter earnings would fall 92 percent for the fourth quarter.
The e-tailer's shares had reached more than $6 early in the quarter, but shares fell almost 15 percent after the preliminary earnings announcement.
Synnex
Mar. 31, 2010: $29.56
Dec. 31, 2009: $30.66
Change: -3.6%
Synnex shares fell this month, despite the distributor beating Wall Street expectations for the first fiscal quarter ended Feb. 28, perhaps because revenue came in just a shade under analysts' projections.
The Fremont, Calif.-based distributor reported $1.94 billion in revenue, compared to $1.72 billion in the year-ago quarter. Analysts had projected a consensus of $1.95 billion in revenue. Synnex earned $23.2 million, or 66 cents per diluted share, from continuing operations for the quarter, exceeding average Wall Street estimates of 62 cents per share.
PC Connection
Mar. 31, 2010: $6.20
Dec. 31, 2009: $6.75
Change: -8.1%
PC Connection's shares fell during the first quarter, despite the Merrimack, N.H.-based direct marketer reporting in February that sales had increased 5.5 percent to $463.1 million compared to the year-ago quarter, and that net income was $4.0 million, or 15 cents per share, compared to a $2.7 million loss, or 10 cents per share for the same quarter last year.
Tech Data
Mar. 31, 2010: $41.90
Dec. 31, 2009: $46.66
Change: -10.2%
Tech Data made news in the first quarter announcing a deal to carry Cisco Systems' Service Provider Technology Group portfolio, and also by launching four new solutions groups in its Advanced Infrastructure Solutions division. The distributor also captured "targeted market share gains" in its fourth fiscal quarter ended Jan. 31, and beat analysts' expectations for both revenue and net income.
But it still didn't win much favor with Wall Street, as shares fell 10.2 percent in the quarter.