The Best And Worst Channel Company Stocks Of 2016

Channel Stocks: Gainers And Losers

While the stock markets got off to a bumpy start in 2016, they finished the year with a surge fueled by investors who expect tax cuts and fiscal stimulus spending under President Donald Trump to boost their business prospects.

It was a good year for many publicly held channel companies and their shareholders. In 2016, 21 of the 25 publicly traded solution providers and distributors on our watch list saw the price of their stocks increase – most by double-digit amounts and one by triple digits – while only four recorded stock price declines.

How does that compare to the stock markets overall? For the year the Dow Jones Index was up 13.42 percent while the Nasdaq was up 7.50 percent.

Here's a look at who was up and who was down for the year, starting with companies with the biggest gains in share price, based on stock closing prices on Dec. 31, 2015 and Dec. 30, 2016.

PCM

CEO: Frank Khulusi

Dec. 31, 2015: $9.93

Dec. 30, 2016: $22.50

Change: +126.59%

PCM went on an acquisition spree in 2015, including its $14 million acquisition of Systemax's North American business-to-business division. In 2016 those acquisitions paid off as the company reported significant gains in revenue and profits.

For the first nine months (ended June 30) of 2016 PCM, No. 28 on the 2016 CRN Solution Provider 500, reported sales of more than $1.66 billion, up 41 percent from $1.18 billion in the first nine months of 2015. The company reported net income of $12.9 million for the most recent nine-month period compared with a $4.1 million loss in the same period in 2015.

On Jan. 2, 2017, after the period covered by this review, PCM acquired $4.1 million Microsoft Gold partner Stratiform to boost its service capabilities around Azure, Office 365 and the Enterprise Mobility Suite.

Computer Sciences Corp.

CEO: Mike Lawrie

Dec. 31, 2015: $32.68

Dec. 30, 2016: $59.42

Change: +81.82%

Just six months after spinning off its U.S. government public sector business, CSC struck a deal in May with Hewlett-Packard Enterprise to merge with that company's Enterprise Services operations.

CSC is currently No. 8 on the 2016 CRN Solution Provider 500. But the merger, expected to be completed early this year, will certainly boost that ranking by creating a $26 billion IT infrastructure, services and solutions behemoth with more than 5,000 clients in 70 countries.

For the first six months (ended Sept. 30) of fiscal 2017, CSC reported revenue of $3.80 billion, up more than 7 percent from $3.55 billion in the first six months of fiscal 2016. But the company reported a loss of $6 million for the first half of fiscal 2017 compared with net income of $334 million in the first half of fiscal 2016.

Datalink

CEO: Paul Lidsky

Dec. 31, 2015: $6.80

Dec. 30, 2016: $11.26

Change: +65.59%

On Nov. 7 Insight Enterprises struck a deal to acquire Datalink for $11.25 per share, or $258 million. Datalink, No. 45 on the 2016 CRN Solution Provider 500, is one of the channel's biggest pure-play data center solution providers and had sales of $547.8 million in the first nine months of 2016.

Insight Enterprises completed the acquisition of Eden Prairie, Minn.-based Datalink on Jan. 6, 2017.

Insight Enterprises, No. 15 on the 2016 CRN Solution Provider 500, is based in Tempe, Ariz., and had sales of $4.02 billion in the first nine months of 2016.

Insight Enterprises

CEO: Kenneth Lamneck

Dec. 31, 2015: $25.12

Dec. 30, 2016: $40.44

Change: +60.99%

As noted on the previous slide, on Nov. 7 Insight Enterprises reached an agreement to acquire Datalink for $11.25 per share ,or $258 million.

Insight Enterprises, a major Microsoft and Cisco channel partner based in Tempe, Ariz., completed the acquisition on Jan. 6, 2017.

For the first nine months of 2016 Insight Enterprises reported sales of $4.02 billion, up 1 percent from $3.99 billion in the first nine months of 2015. Earnings for the nine months were $63.6 million, up 11 percent from $57.3 million in the same period in 2015.

Black Box Network Services

CEO: E.C. Sykes

Dec. 31, 2015: $9.53

Dec. 30, 2016: $15.25

Change: +60.02%

In February Black Box Network Services named E.C. Sykes to be its new CEO following the resignation of CEO Michael McAndrew. In May the company reported that in fiscal 2016 (ended March 31) sales fell 8 percent amid a difficult sales restructuring.

In April the company, No. 37 on the 2016 CRN Solution Provider 500, acquired Cloudium, a privately held Irish company that specializes in developing desktop virtualization hardware and software.

For the first six months (ended Oct. 1) of fiscal 2017, Black Box reported revenue of $437.2 million, down more than 6 percent from $466.1 million in the first half of fiscal 2016. But the company's reported loss of $6.6 million in the first six months of fiscal 2017 was much improved from the $129.1 million loss in the same period one year earlier.

ManTech International

CEO: George Pedersen

Dec. 31, 2015: $30.24

Dec. 30, 2016: $45.25

Change: +39.72%

In June U.S. government services powerhouse ManTech International acquired the cyber business of Oceans Edge, a move that bolstered the company's cyberintelligence practice with vulnerability research, development and analysis capabilities.

In December ManTech, No. 29 on the 2016 CRN Solution Provider 500, bought Edaptive Systems, a 250-person solution provider, to help the company pursue more IT business in the federal health-care space, especially with the Centers for Medicare & Medicaid Services.

For the first nine months (ended Sept. 30) of 2016, ManTech reported revenue of $1.21 billion, up more than 5 percent from $1.15 billion in the first nine months of 2015. Net income for the period was $42.7 million, up 14.5 percent from $37.2 million in the same period one year earlier.

Unisys

CEO: Peter Altabef

Dec. 31, 2015: $11.05

Dec. 30, 2016: $14.95

Change: +35.29%

Unisys has been in turnaround mode in recent years and while it made progress in 2016 in its efforts to return to sales growth and profitability, the company, No. 19 on the 2016 CRN Solution Provider 500, still has work to do it 2017.

For the first nine months of 2016, Unisys reported revenue of $2.10 billion, down nearly 6 percent from $2.23 billion in the same period in 2015. The company reported a loss of $46.5 million for the nine months, down from the $111.0 loss the company reported for the same period nine-month period one year before.

On Nov. 1 senior vice president and CFO Janet Haugen retired from Unisys after working at the company for 20 years. Inder Singh, previously Unisys' chief strategy and marketing officer, was named to replace Haugen.

Synnex

CEO: Kevin Murai

Dec. 31, 2015: $89.93

Dec. 30, 2016: $121.02

Change: +34.57%

In July Synnex struck a deal to buy business process outsourcing services company Minacs Group for $420 million. The acquisition, completed in August, was designed to help Synnex boost its Concentrix global services division.

For its fiscal 2016 ended Nov. 30, Synnex reported revenue of $14.06 billion, up 5.4 percent from $13.34 billion in fiscal 2015. Net income in fiscal 2016 grew nearly 13 percent to $234.9 million from $208.5 million one year earlier.

CACI International

CEO: Kenneth Asbury

Dec. 31, 2015: $92.78

Dec. 30, 2016: $124.30

Change: +33.97%

On Dec. 5 CACI International, a leading solution provider in the federal government and national defense market, was awarded a $1.77 task order by the Department of Defense to provide "deployable analytical operations, integrated intelligence and training services" to the Department of Defense's Joint Improvised-Threat Defeat Organization.

For its fiscal 2017 first quarter (ended Sept. 30), CACI reported revenue of $1.07 billion, up 30.5 percent from $822.4 million in the first quarter of fiscal 2016. Net income was $36.7 million, up 6 percent from $34.6 million one year before.

Arrow Electronics

CEO: Michael Long

Dec. 31, 2015: $54.18

Dec. 30, 2016: $71.30

Change: +31.60%

Arrow Electronics has been shifting its product and solutions portfolio, putting less emphasis on being a products distributor and focusing more on digital solutions and services, including in such areas as security and big data.

On Dec. 14 Arrow's board authorized the repurchase of up to an additional $400 million of the company's common stock. The distributor has spent approximately $1.4 billion on share repurchases since the beginning of 2012.

For the first nine months (ended Oct. 1) of 2016, Arrow reported sales of $17.38 billion, up more than 5 percent from $16.53 billion in the first nine months of 2015. Net income for the first nine months of 2016 was $358.2 million, up nearly 6 percent from $339.2 million one year earlier.

Ingram Micro

CEO: Alain Monie

Dec. 31, 2015: $30.38

Dec. 6, 2016: $38.89

Change: +28.01%

In February distributor Ingram Micro announced a deal to be acquired by Chinese logistics firm Tianjin Tianhai, itself part of $30 billion Chinese conglomerate HNA Group, for $38.90 per share. or approximately $6 billion.

The acquisition officially closed Dec. 6 and the company ceased trading on the New York Stock Exchange. Later in December Ingram Micro CFO William Humes, and executive vice president, and general counsel Larry Boyd left the company.

Alain Monie, who retains the CEO post, said the acquisition allows the company to take more risks and will help it boost its market share in the huge China market.

Tech Data

CEO: Robert Dutkowsky

Dec. 31, 2015: $66.38

Dec. 30, 2016: $84.68

Change: +27.57%

On Sept. 19 distributor Tech Data unveiled a deal to acquire Avnet's Technology Solutions business for $2.6 billion in a deal that reshapes the value-added distribution landscape. Acquiring Avnet's $9.65 billion Technology Solutions business will boost Tech Data's data center business, growing that operation's share of Tech Data's total revenue from 29 percent to 45 percent.

The companies expect to complete the acquisition sometime in the first half of 2017.

For the first three quarters (ended Oct. 31) of fiscal 2017, Tech Data reported sales of $18.81 billion, down a fraction of 1 percent from $18.90 billion in the first three quarters of fiscal 2016. Net income for the most recent three quarters was $116.3 million, down 31 percent from $169.6 million one year earlier.

ScanSource

CEO: Mike Baur

Dec. 31, 2015: $32.22

Dec. 30, 2016: $40.35

Change: +25.23%

On Aug. 8 ScanSource surprised the channel when it unveiled an agreement to buy master agent Intelisys Communications for $83.6 million, plus earn-outs, in a deal that will bring more recurring-revenue telecom and cloud service opportunities to its traditional communications resellers. That pushed up the company's shares to more than $42 a share that day. The acquisition was completed Aug. 29.

In October the company promoted Paul Constantine and Tony Sorrentino to serve as co-presidents of the company's $2.38 billion bar-code, networking and security business. Buck Baker, who had been in charge of that business, was named president of ScanSource's $1.16 billion communications and services business.

For its fiscal 2017 first quarter (ended Sept. 30), ScanSource reported sales of $932.6 million, up 7 percent from $870.8 million in the first quarter of fiscal 2016. Net income for the quarter was $14.8 million, down 7 percent from $16.0 million one year earlier.

Connection

CEO: Timothy McGrath

Dec. 31, 2015: $22.64

Dec. 30, 2016: $28.09

Change: +24.07%

In September PC Connection, No. 21 on the CRN Solution Provider 500, changed its name to Connection to better reflect its IT offerings, from data center and networking, to software and security.

For the first nine months (ended Sept. 30) of 2016, Connection reported sales of $1.96 billion, up 3.5 percent from $1.89 billion in the first nine months of 2015. Net income for the nine months in 2016 was $35.1 million, up 5.7 percent from $33.2 million in the same period in 2015.

CDW

CEO: Thomas Richards

Dec. 31, 2015: $42.04

Dec. 30, 2016: $52.09

Change: +23.91%

For the first nine months of 2016 CDW, No. 5 on the 2016 CRN Solution Provider 500, reported sales of $10.49 billion, up nearly 10 percent from $9.57 billion in the first nine months of 2015. Net income for the nine months was $321.2 million, up 2.3 percent from $313.8 million in the same period one year earlier.

ePlus Technology

CEO: Mark Marron

Dec. 31, 2015: $93.26

Dec. 30, 2016: $115.20

Change: +23.53%

Phil Norton stepped down as CEO of ePlus Technology, No. 34 on the 2016 CRN Solution Provider 500, in late July after serving in the top post for 23 years. Norton was replaced by longtime chief operating officer Mark Marron.

In December ePlus expanded its geographical reach into the Upper Midwest by acquiring the IT services equipment and integration business of Consolidated Communications Holdings.

For the first half (ended Sept. 30) of fiscal 2017, ePlus reported sales of $670.0 million, up 10.5 percent from $606.2 million in the same period of fiscal 2016. Net income for the six-month period was $27.4 million, up 12 percent from $24.5 million in the same period one year earlier.

CGI Group

CEO: George Schindler

Dec. 31, 2015: $40.03

Dec. 30, 2016: $48.03

Change: +19.99%

In April technology consultancy CGI, No. 18 on the 2016 CRN Solution Provider 500, said it had completed a nearly $43 million restructuring program and was focused on growing its recurring revenue business in the second half of its fiscal 2016.

On Sept.r 8 CGI said that president and chief operating officer George Schindler would become president and CEO effective Oct. 1, taking over for CEO Michael Roach who retired effective Sept. 30, the end of the company's fiscal year.

For the company's fiscal 2016 ended Sept. 30, CGI reported revenue of $10.68 billion (Canadian), up nearly 4 percent from $10.29 billion (Canadian) in fiscal 2015. Net earnings for the fiscal year were $1.07 billion (Canadian), up more than 9 percent from $977.6 million (Canadian) in fiscal 2015.

Accenture

CEO: Pierre Nanterme

Dec. 31, 2015: $104.50

Dec. 30, 2016: $117.13

Change: +12.09%

In 2016 systems integrator Accenture, No. 2 on the 2016 CRN Solution Provider 500, continued with the aggressive acquisition strategy it began in 2015.

Some of the acquisitions were small, narrowly focused companies such as CRMWaypoint, a Netherlands-based partner of cloud CRM application vendor Salesforce.com. In September it unveiled a deal to buy DayNine, a 400-person Workday partner.

Some of the acquisitions were part of the company's efforts to assemble a $1 billion security practice. In December Accenture struck a deal to buy Arismore, a 270-person French firm specializing in identity and access management security services.

For the first quarter (ended Nov. 30) of fiscal 2017, Accenture reported revenue of $9.01 billion, up more than 6 percent from $8.47 billion in the first quarter of fiscal 2016. Net income for the quarter was $1.00 billion, up 23 percent from $818.9 million in the same quarter one year earlier.

Avnet

CEO: Bill Amelio

Dec. 31, 2015: $42.84

Dec. 30, 2016: $47.61

Change: +11.13%

CEO Rick Hamada stepped down on July 11 after more than five years in the job. Former Lenovo CEO Bill Amelio replaced him on an interim basis and was later named permanent CEO.

On Sept. 19 distributor Tech Data unveiled a deal to acquire Avnet's Technology Solutions business for $2.6 billion. Acquiring Avnet's $9.65 billion Technology Solutions business will boost Tech Data's data center business, growing that operation's share of Tech Data's total revenue from 29 percent to 45 percent.

The companies expect to complete the acquisition sometime in the first half of 2017.

Perficient

CEO: Jeffrey Davis

Dec. 31, 2015: $17.12

Dec. 30, 2016: $17.49

Change: +2.16%

In April, in a bid to expand its digital transformation services, Perficient launched a full-service, 200-person digital agency division to better meet the needs of chief marketing officers. The operation is designed to go beyond traditional IT services and provide businesses with a range of support services in creative design, branding and search engine optimization, combined with back-end support for ecommerce and transactions.

In October Perficient, No. 61 on the 2016 CRN Solution Provider 500, followed up that move by acquiring Bluetube, a $7 million, 60-person digital consultancy that is expected to boost Perficient's expertise around enterprise mobile applications, creative services, marketing and strategy.

Systemax

CEO: Larry Reinhold

Dec. 31, 2015: $8.60

Dec. 30, 2016: $8.77

Change: +1.98%

Systemax underwent some significant changes in 2016, including closing its retail business and eliminating as many as 500 jobs in an effort to cut costs.

In March the company, No. 26 on the 2016 CRN Solution Provider 500, elevated chief financial officer Larry Reinhold to CEO while former CEO Richard Leeds became executive chairman, the latter given the task of helping guide the company's strategic direction and overseeing the development of new products and services.

For the first nine months (ended Sept. 30) of 2016, Systemax reported sales of $1.27 billion, down almost 9 percent from $1.39 billion in the first nine months of 2015. The company reported a loss of $8.6 million from continuing operations for the nine months compared with a $36.8 million loss from continuing operations in the same period one year before.

Cognizant Technology Solutions

CEO: Francisco D'Souza

Dec. 31, 2015: $60.02

Dec. 30, 2016: $56.03

Change: -6.65%

Cognizant, No. 7 on the 2016 CRN Solution Provider 500, is the first channel company on our watch list to record a decline in its stock price in 2016.

On Sept. 30 Cognizant disclosed that it was investigating whether it had violated the U.S. Foreign Corrupt Practices Act, a move the company said stemmed from certain payments relating to facilities in India. At the same time Cognizant announced the resignation of president Gordon Coburn, who had been with the company for two decades in various capacities.

Cognizant's stock plummeted more than 16 percent on the day of the two disclosures.

In late November activist investor Elliott Management, which acquired a 4 percent stake in Cognizant, called on Cognizant to shake up its board of directors and buy back $2.5 billion in shares as part of what it called a value enhancement plan aimed at driving up share prices by 50 percent to 69 percent in 2017.

SS&C Technologies

CEO: William Stone

Dec. 31, 2015: $34.13

Dec. 30, 2016: $28.60

Change: -16.20%

SS&C Technologies, a provider of IT solutions and services for the financial and investment management industry, is another company that aggressively pursued acquisitions in 2016.

In September SS&C, No. 36 on the 2016 CRN Solution Provider 500, struck a deal to purchase Wells Fargo Global Fund Services to strengthen its middle- and back-office management capabilities for hedge funds and private equity funds. In October the company boosted its portfolio of CRM solutions with an agreement to buy CRM platform developer Salentica. And in December SS&C spent $88.5 million to acquire Conifer Financial Services, an asset management services firm.

For the first nine months (ended Sept. 30) of 2016, SS&C reported revenue of $1.08 billion, up 54.5 percent from $699.4 million in the first nine months of 2015. Net income for the nine months was $74.0 million, up 140 percent from $30.8 million one year earlier.

In June SS&C executed a 2-for-1 stock split. The Dec. 31, 2015 closing price has been adjusted from the original $68.27 to $34.13.

Syntel

CEO: Rakesh Khanna

Dec. 31, 2015: $45.25

Dec. 30, 2016: $19.79

Change: -56.27%

Syntel, No. 38 on the 2016 CRN Solution Provider 500, is an IT consulting and outsourcing services provider.

In October Syntel Chairman and co-founder Bharat Desai said during an earnings call that the company was dealing with multiple challenges including software global macroeconimic trends, industry-specific headwinds and regulatory-related uncertainty in key markets.

On Oct. 31 Syntel president and CEO Nitin Rakesh stepped down after two and a half years in the position and was replaced on an interim basis by Rakesh Khanna, the solution provider's chief operating officer. A source told CRN that Rakesh's decision to resign was a personal one.

On Nov. 16 Syntel's board authorized a stock repurchase plan with a total value not to exceed $10 million.

Ciber

CEO: Michael Boustridge

Dec. 31, 2015: $3.51

Dec. 30, 2016: $0.63

Change: -82.05%

Ciber, No. 43 on the 2016 CRN Solution Provider 500, struggled to turn its business around in 2016 and the company's stock price suffered a steep decline – the biggest on our watch list.

In May, after reporting poor results for its first fiscal quarter ending March 31, Ciber said it would reduce its employee roster as part of its goal of cutting $5 million from its sales, general and administrative costs by the end of this year.

The company also divested non-strategic operations and focusing on its core IT staffing, implementation, application modernization, consulting and managed services businesses. In June the company announced a deal to sell its Netherlands business to Milwaukee-based ManpowerGroup for $25 million.

On Oct. 31 Ciber's directors disclosed in a filing with the U.S. Securities and Exchange Commission that it had engaged a consulting firm to help it explore strategic alternatives that could including selling the company, selling off additional assets or refinancing the company's debt.

For the first nine months (ending Sept. 30) of 2016, Ciber reported revenue of $485.3 million, down 18 percent from $592.6 million in the first nine months of 2015. The company reported a loss of $167.2 million for the nine-month period compared with earnings of just less than $5 million in the same period in 2015.