The Best And Worst Channel Company Stocks In 2017

Channel Stocks: Who's Up And Who's Down

Stock markets were on an upward trajectory through much of 2017 with only intermittent pullbacks. For the year the Dow Jones Index was up a healthy 25.08 percent while the Nasdaq was up an impressive 28.24 percent.

So how did publicly held solution provider companies fare? Seventeen of the companies on our channel watch list recorded stock price increases in the year, most by double-digit percentages, while 10 recorded stock price declines – several by hefty double-digit percentages.

Here's a look at who was up and who was down in 2017, starting with companies with the biggest gains in share price, based on stock closing prices on Dec. 30, 2016, and Dec. 29, 2017.

Systemax

CEO: Larry Reinhold

Dec. 30, 2016: $8.77

Dec. 29, 2017: $33.37

Change: +279.36%

Systemax, No. 30 on the 2017 CRN Solution Provider 500, underwent significant changes in the past two years, including closing its retail business, exiting the North American business-to-business technology market, and eliminating jobs in an effort to cut costs. Those efforts apparently paid off because the company's shares recorded the biggest increase among all the companies on our channel stock watch list.

DXC Technology

CEO: Mike Lawrie

Dec. 30, 2016: $59.42

Dec. 29, 2017: $94.90

Change: +59.71%

April 3 marked the launch of DXC Technology, a $26 billion IT infrastructure, services and solutions company created from the merger of CSC and HPE's Enterprise Services operations. Trading of DXC Technology stock began that day and trading of CSC shares ended.

DXC, based in Tysons Corner, Va., is No. 11 on the 2017 CRN Solution Provider 500 and the company has continued to expand into new areas since its creation. In July it acquired Tribridge, a solution provider that works with Microsoft's Dynamics 365 cloud applications. And in October DXC acquired Logicalis SMC, a Netherlands-based solutions provider for the service management sector, in a move DXC said would expand its position as a ServiceNow integration partner.

On Oct. 11 DXC disclosed a plan to divest its $2.9 billion U.S. government business and merge it with federal government consultancy Vencore and background investigation service provider KeyPoint to create one of the five largest pure-play U.S. government solution providers.

DXC is also in the midst of an ambitious plan to cut its operating costs by $1 billion by the end of its first year of operations, eliminating multiple management layers and closing underutilized facilities.

Presidio

CEO: Bob Cagnazzi

March 10, 2016: $13.50

Dec. 29, 2017: $19.17

Change: +42.00%

Solution provider powerhouse Presidio, No. 21 on the 2017 CRN Solution Provider 500, went public on March 10, selling 16.7 million shares on the Nasdaq exchange and raising $233 million. The company planned to use the funds to pay down the company's roughly $1 billion debt and strengthen its balance sheet.

For its fiscal 2017 (ended June 30), New York-based Presidio reported revenue of $2.82 billion, up 3.8 percent from $2.71 billion in fiscal 2016. Net income in fiscal 2017 reached $4.4 million compared with a $3.4 million loss in fiscal 2016.

For the company's fiscal 2018 first quarter (ended Sept. 30), Presidio reported revenue of $765.0 million, up nearly 4 percent from $737.7 million in the first quarter of fiscal 2017. Net income was $19.8 million, up 254 percent from $5.6 million one year earlier.

SS&C Technologies

CEO: William Stone

Dec. 30, 2016: $28.60

Dec. 29, 2017: $40.48

Change: +41.54%

SS&C, based in Windsor, Conn., is No. 33 on the 2017 CRN Solution Provider 500.

In October SS&C reported that revenue in the first nine months (ended Sept. 30) of 2017 was $1.24 billion, up 14.5 percent from $1.08 billion in the same period in 2016. Net income for the nine months reached $163.5 million, up 121 percent from nearly $74 million in the first nine months of 2016.

SS&C's Jan. 11 announcement that it had struck a deal to acquire DST Systems, a supplier of financial and health-care IT solutions, for $5.4 billion occurred after the closing date for stock prices for this 2017 analysis.

CDW

CEO: Thomas Richards

Dec. 30, 2016: $52.09

Dec. 29, 2017: $69.49

Change: +33.40%

On Aug. 3 CDW's board of directors authorized a $750 million increase in the company's common stock share repurchase program. The $750 million is in addition to the $283 million in the repurchase program that was unused as of June 30. The company also announced a $0.16 per share dividend.

For the first nine months (ended Sept. 30) of 2017, CDW reported sales of $11.35 billion, up more than 8 percent from $10.49 billion in the first nine months of 2016. Net income for the most recent nine months was $327.8 million, up more than 2 percent from $321.2 million in the first nine months of 2016.

Accenture

CEO: Pierre Nanterme

Dec. 30, 2016: $117.13

Dec. 29, 2017: $153.09

Change: +30.70%

Accenture, No. 2 on the 2017 CRN Solution Provider 500, has acquired a steady stream of small companies in recent years to enhance its service offerings and to expand into vertical industries and new technology areas like Agile development, mobile systems, and digital commerce and marketing. The company also made investments in startups including big data tech developer Paxata and struck alliances with major companies including Apple, Amazon Web Services and Pivotal.

For its fiscal 2018 first quarter (ended Nov. 30), Accenture, based in Dublin, Ireland, reported revenue of $10.05 billion, up nearly 12 percent from $9.01 billion in the first quarter of fiscal 2017. Net income for the quarter was $1.19 billion, up more than 12 percent from $1.06 billion one year earlier.

For its fiscal 2017 ended Aug. 31, Accenture reported revenue of $36.77 billion, up 5.7 percent from $34.80 billion in fiscal 2016. But net income for fiscal 2017 was $3.63 billion, down more than 16 percent from $4.35 billion in fiscal 2016.

ePlus Technology

CEO: Mark Marron

Dec. 30, 2016: $57.60

Dec. 29, 2017: $75.2

Change: +30.55%

On Feb. 2 ePlus Technology, No. 35 on the 2017 CRN Solution Provider 500, announced plans for a 2-for-1 stock split effective April 3, and the ongoing stock prices have been adjusted accordingly.

On Aug. 18 the Herndon, Va.-based company said that its board had authorized a stock repurchase program to buy back up to 500,000 shares of common stock over a 12-month period. As of July 31 the company had approximately 14.2 million shares of common stock outstanding.

Like other solution providers in 2017, ePlus made a number of acquisitions to spur growth and expand into new areas. Those included the acquisition of software development specialist OneCloud in May and data center solution provider Integrated Data Storage in September. In November CFO Elaine Marion said about 50 percent of ePlus' revenue growth in the first half of fiscal 2018 came from acquired businesses.

For the first two quarters (ended Sept. 30) of fiscal 2018, ePlus reported net sales of $738.0 million, up 10 percent from $670.0 million in the first six months of fiscal 2017. Net earnings for the first half of fiscal 2018 were $30.6 million, up nearly 12 percent from $27.4 million in the first half of fiscal 2017.

Cognizant Technology Solutions

CEO: Francisco D'Souza

Dec. 30, 2016: $56.03

Dec. 29, 2017: $71.02

Change: +26.75%

In February Cognizant, No. 7 on the 2017 CRN Solution Provider 500, reached an agreement with activist investor Elliott Management under which the solution provider promised to appoint three new directors to its board and create a three-person financial policy committee to assist and advise the board on issues relating to the company's operating plan and capital allocation policy. The agreement came after Elliott Management put pressure on Cognizant to improve shareholder value.

Cognizant, based in Teaneck, N.J., also promised to invest more in new technology practices, target non-GAAP operating margins of 22 percent by 2019, and return $3.4 billion to shareholders in the next two years through share repurchases and dividends.

In August the company said that it had slashed its employee headcount by 4,400 workers in the previous quarter as part of the company's effort to improve its operating margins.

On Sept. 30 Cognizant president Gordon Coburn resigned after two decades with the company. Cognizant also said it was investigating whether it violated the U.S. Foreign Corrupt Practices Act because of certain payments relating to facilities in India.

ManTech International

CEO: Kevin Phillips

Dec. 30, 2016: $45.25

Dec. 29, 2017: $50.19

Change: +18.79%

On Dec. 13 ManTech said that effective Jan. 1, 2018, chairman and CEO George Pedersen would transition from his day-to-day management role as CEO to become executive chairman, continuing to guide overall corporate strategy and manage the vendor's mergers and acquisitions program. Kevin Phillips, who has served as company president since 2016, was named the new CEO.

On Sept. 18 ManTech International struck a deal to acquire InfoZen, a leading IT solution provider with expertise in IT modernization, Agile/DevOps software development, cloud migration, and threat monitoring and assessment in support of critical national and homeland security. ManTech, based in Fairfax, Va., said the acquisition, for $180 million in cash, would expand its presence in federal civilian agencies and add to its IT modernization and managed cloud services capabilities. The acquisition closed Oct. 2.

For the first nine months (ended Sept. 30) of 2017, ManTech, No. 31 on the 2017 CRN Solution Provider 500, reported revenue of $1.25 billion, up nearly 4 percent from $1.21 billion in the first nine months of 2016. Net income for the period was $45.8 million, up more than 7 percent from $42.7 million in the same period one year before.

Syntel

CEO: Rakesh Khanna

Dec. 30, 2016: $19.79

Dec. 29, 2017: $22.99

Change: +16.17%

Syntel, No. 38 on the 2017 CRN Solution Provider 500, began 2017 under new management. On Oct. 31, 2016, 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. Khanna was named permanent president and CEO on July 18.

For the first nine months (ended Sept. 30) of 2017, Syntel, based in Troy, Mich., reported revenue of $684.0 million, down more than 6 percent from $728.7 million in the first nine months of 2016. Net income for the nine months was $123.9 million compared with a loss of $105.4 million in the same period one year earlier.

Tech Data

CEO: Robert Dutkowsky

Dec. 30, 2016: $84.68

Dec. 29, 2017: $97.97

Change: +15.69%

On Feb. 27 distributor Tech Data closed its $2.6 billion acquisition of Avnet's Technology Solutions business, announced in September 2016, in a deal that reshapes the value-added distribution landscape. The acquisition of Avnet's $9.65 billion Technology Solutions business gave a boost to Tech Data's data center business.

On Aug. 31 the Clearwater, Fla.-based company reported lower-than-expected earnings in the second quarter, leading to a significant decline in the company's stock price in after-hours trading. The distributor said weaker-than-expected sales of data center products caused the distributor to miss out on back-end rebates from several large vendors, contributing to the earnings shortfall.

For the first three quarters (ended Oct. 31) of its fiscal 2018, Tech Data reported net sales of $25.68 billion, up 37 percent from $18.81 billion in the first three quarters of fiscal 2017. Net income for the three-quarter period was $115.4 million, down 1 percent from $116.3 million in the same period one year before.

CGI Group

CEO: George Schindler

Dec. 30, 2016: $48.03

Dec. 29, 2017: $54.33

Change: +13.12%

On Aug. 23 Montreal-based CGI said it had acquired Pittsburgh-based Summa Technologies, a high-end IT consultancy with expertise in digital experience and Agile software development, in an all-cash transaction. On Dec. 7 the company acquired commercial business consulting company Paragon Solutions, strengthening its presence in the New York-Philadelphia area.

On Sept. 19 CGI, No. 19 on the 2017 CRN Solution Provider 500, said it would repurchase for cancellation 4.85 million shares of Class A subordinate voting shares from Caisse de depot et placement du Quebec at $61.80 per share. After the purchase la Caisse will still own 46.2 million shares, approximately 16 percent of CGI's outstanding shares.

For its fiscal 2017 (ended Sept. 30), CGI reported revenue of CA$10.85 billion (U.S. $8.73 billion), up 1.5 percent from CA$10.68 billion (U.S. $8.60 billion) from fiscal 2016. Net earnings for the year were CA$1.04 billion (U.S. $833.1 million), down more than 3 percent from CA$1.07 billion (U.S. $859.8 million) one year before.

Arrow Electronics

CEO: Michael Long

Dec. 30, 2016: $71.30

Dec. 29, 2017: $80.41

Change: +12.78%

For the first nine months (ended Sept. 30) of 2017, distributor Arrow Electronics, based in Centennial, Colo., reported sales of $19.18 billion, up 10.3 percent from $17.38 billion in the first nine months of 2016. Net income for the period was $348.1 million, down 2.8 percent from $358.2 million in the same period in 2016.

Synnex

CEO: Kevin Murai

Dec. 30, 2016: $121.02

Dec. 29, 2017: $135.95

Change: +12.37%

On Sept. 1 Synnex completed its acquisition of Westcon-Comstor's $2.18 billion North American and Latin American businesses as part of an $830 million deal that also included a stake in Westcon-Comstor's $2.35 billion international business and an option to acquire an additional stake in that business. The acquisition provides Synnex with a way to enter the market for Cisco's products.

For all of fiscal 2017 (ended Nov. 30) Synnex, based in Fremont, Calif., reported revenue of $17.05 billion, up 21.2 percent from $14.06 billion in fiscal 2016. Net income for fiscal 2017 was $301.2 million, up more than 28 percent from $234.9 million in fiscal 2016.

On Jan. 9, after the period covered by this analysis, Synnex announced that longtime president and CEO Kevin Murai would retire from those jobs as of March 1 and become the company's chairman. He had held the top post for 10 years. The company named chief operating officer Dennis Polk to replace Murai on March 1.

Perficient

CEO: Jeffrey Davis

Dec. 30, 2016: $17.49

Dec. 29, 2017: $19.07

Change: +9.03%

In June Perficient, No. 57 on the 2017 CRN Solution Provider 500, acquired Clarity, a Chicago-based software consultancy with annual revenue of $27 million and 160 employees. The move grew the solution provider's cloud and custom application development practices, and more specifically expanded its systems integration and software development services in the Microsoft market.

For the first nine months (ended Sept. 30) of 2017, St. Louis-based Perficient reported revenue of $351.8 million, down more than 4 percent from $367.4 million in the first nine months of 2016. Net income for the first nine months of the year was $12.1 million, down 27.6 percent from $16.8 million in the first nine months of 2016.

Conduent

CEO: Ashok Vemuri

Jan. 3, 2016: $14.90

Dec. 29, 2017: $16.16

Change: +8.46%

Conduent is the $6.4 billion business process outsource service provider created when Xerox was split into two companies at the beginning of 2017. The company's shares began trading Jan. 3.

For the first nine months (ended Sept. 30) of 2017, Conduent, based in Florham Park, N.J., reported revenue of $4.53 billion, down 7.5 percent from $4.89 billion in the first nine months of 2016. The company reported a loss of $27 million compared with a $32 million loss in the same period one year before.

CACI International

CEO: Kenneth Asbury

Dec. 30, 2016: $124.30

Dec. 29, 2017: $132.35

Change: +6.48%

On Sept. 14 CACI, a supplier of IT solutions and services to national defense, intelligence and civilian government agencies, said it had been awarded a $91 million task order by the U.S. Army to support airborne intelligence, surveillance and reconnaissance systems.

For its fiscal 2018 first quarter (ended Sept. 30), CACI reported revenue of $1.09 billion, up 1.2 percent from $1.07 billion in the same quarter one year earlier. Net income was $42.0 million, up 14.7 percent from $36.7 million one year before.

The company plans to release its fiscal 2018 second quarter results on Jan. 31.

For all of fiscal 2017 ended June 30 CACI, basedin Arlington, Va., reported revenue of $4.35 billion, up 16.3 percent from $3.74 billion in fiscal 2016. Net income for the year was $163.7 million, up 13.4 percent from $142.8 million one year before.

West Corp.

CEO: John Shlonsky

Dec. 30, 2016: $24.76

Oct. 10, 2017: $23.50

Change: -5.09%

On May 9 telecom service provider West Corp., No. 24 on the 2017 CRN Solution Provider 500, announced a deal to be acquired by private equity giant Apollo Global Management – the largest IT industry acquisition in the first half of 2017. Apollo paid $23.50 per share for West Corp. and assumed more than $3 billion of the company's debt, putting the total value of the deal at approximately $5.1 billion.

The acquisition was completed on Oct. 10 and trading of the Omaha-based company's shares ended that day at $23.50 a share.

On Nov. 6 the company said John Shlonsky had been named CEO and director of West Corp. effective immediately, replacing CEO Thomas Barker who retired after 26 years at West. Shlonsky came to West from TSYS where he was senior executive vice president and president of TSYS' Merchant Services segment.

Insight Enterprises

CEO: Kenneth Lamneck

Dec. 30, 2016: $40.44

Dec. 29, 2017: $38.29

Change: -5.32%

On Jan. 6 Insight Enterprises, a major Microsoft and Cisco channel partner based in Tempe, Ariz., completed its $258 million acquisition of Datalink, one of the channel's biggest pure-play data center solution providers and No. 45 on the 2016 CRN Solution Provider 500.

Insight, No. 13 on the 2017 CRN Solution Provider 500, said the acquisition strengthened its competitive position, through global scale and technical talent, in delivering on-premise and cloud data center solutions.

For the first nine months (ended Sept. 30) of 2017, Insight Enterprises reported sales of $4.92 billion, up 22 percent from $4.02 billion in the first nine months of 2016. Net earnings for the first nine months of 2017 were $76.5 million, up 20 percent from $63.6 million one year before.

CSRA

CEO: Larry Prior

Dec. 30, 2016: $31.84

Dec. 29, 2017: $29.92

Change: -6.03%

CSRA is the government IT services company formed in late 2015 through the combination of SRA International and the federal government business of Computer Sciences Corp. Based in Falls Church, Va., CSRA is No. 14 on the 2017 CRN Solution Provider 500.

On July 5 CSRA completed its acquisition of NES Associates, a provider of IT services to the U.S. military and federal government agencies. NES brought to CSRA its expertise in enterprise networking, cybersecurity, infrastructure and application architecture. The acquisition was CSRA's first as a public company.

On Oct. 17 CSRA announced an agreement to acquire Praxis Engineering Technologies, a provider of mission applications development and engagement in the intelligence community, for $235 million.

For the first half (ended Sept. 29) of fiscal 2018, CSRA reported revenue of $2.50 billion, down 0.6 percent from $2.52 billion in the first half of fiscal 2017. But net income for the first half of fiscal 2018 was up 8.5 percent to $153 million from $141 million in the same period one year before.

Connection

CEO: Timothy McGrath

Dec. 30, 2016: $28.09

Dec. 29, 2017: $26.21

Change: -6.69%

For the first nine months of 2017 (ended Sept. 30), Connection, No. 22 on the 2017 CRN Solution Provider 500, reported sales of $2.15 billion, up nearly 10 percent from $1.96 billion in the first nine months of 2016. Net income for the first nine months of 2017 was $34.1 million, down 2.8 percent from $35.1 million in the same period one year before.

Merrimack, N.H.-based PC Connection changed its name to "Connection" in 2016 to better reflect its IT offerings, from data center and networking, to software and security.

ScanSource

CEO: Mike Baur

Dec. 30, 2016: $40.35

Dec. 29, 2017: $35.80

Change: -11.28%

In August distributor ScanSource named Gerald Lyons executive vice president and chief financial officer, the latter a job Lyons had filled on an interim basis for nine months.

On June 29 ScanSource announced a deal to acquire POS Portal, a provider of point-of-sale devices and services for small and midsize businesses, for $110 million.

For its fiscal 2018 first quarter (ended Sept. 30), ScanSource reported sales of $924.6 million, down 1 percent from $932.6 million in the first quarter of fiscal 2017. Net income for the quarter was $4.1 million, down 72 percent from $14.8 million one year earlier.

Avnet

CEO: William Amelio

Dec. 30, 2016: $47.61

Dec. 29, 2017: $39.62

Change: -16.78%

Avnet completed the $2.6 billion sale of its Avnet Technology Solutions business to distributor Tech Data on Feb. 27 in a deal that is reshaping the value-added distribution industry. The deal to sell the $9.65 billion Technology Solutions business was announced in September 2016.

On Dec. 28 Avnet named Tom Liguori the distributor's new chief financial officer, replacing Kevin Moriarty, Avnet's chief financial officer for more than four years, who stepped down in August for personal reasons. Liguori, who starts Jan. 29, joins Avnet from Advanced Energy Industries.

On Nov. 10 Phoenix-based Avnet expanded its share repurchase program by $200 million.

For its fiscal 2018 first quarter (ended Sept. 30), Avnet reported sales of $4.66 billion, up 4.8 percent from $4.12 billion in the first quarter of fiscal 2017. Net income declined 15 percent, however, to $58.3 million from $68.8 million one year before.

Unisys

CEO: Peter Altabef

Dec. 30, 2016: $14.95

Dec. 29, 2017: $8.15

Change: -45.48%

On Dec. 12 Unisys, No. 20 on the 2017 CRN Solution Provider 500, said that Peter Altabef would become the company's chairman on April 26, 2018, replacing current chairman Paul Weaver, who is retiring. Altabef will continue as the company's president and CEO.

For the first nine months (ended Sept. 30) of 2017, Unisys, based in Blue Bell, Pa., reported revenue of just under $2.00 billion, down nearly 5 percent from $2.10 billion in the first nine months of 2016. The company reported a $115.8 million loss for the nine months compared with a $46.5 million loss in the same period one year earlier.

The company also reaffirmed its guidance for all of 2017, forecasting revenue to be between $2.65 billion and $2.75 billion. The company will announce its 2017 fourth-quarter and full-year results on Feb. 8.

PCM

CEO: Frank Khulusi

Dec. 30, 2016: $22.50

Dec. 29, 2017: $9.90

Change: -56.00%

PCM's shares were on the upswing for the first several months of the year, hitting a high of $30.30 per share on April 27. But the company's shares took several hits during the year that sent its price tumbling: From $30.15 on April 27 to $19 on May 3; from $19.75 on July 26 to $12.38 on July 31; and from $14.15 on Nov. 6 to $10 on Nov. 7. Those dates coincide with the release of the company's first, second and third quarterly results.

Part of PCM's stock price decline was also attributed to the company's disclosure in May that En Pointe, whose IT solutions business PCM acquired in 2015 for $15 million and other considerations, had allegedly overstated the profitability of its business and that breaches by an En Pointe subsidiary had damaged PCM's goodwill with customers.

In a lawsuit filed in April PCM, based in El Segundo, Calif., and No. 25 on the 2017 CRN Solution Provider 500, said damages from the En Point problems exceed $57 million – more than triple the company's 2016 net income.

For the first nine months (ended Sept. 30) of 2017, PCM reported sales of $1.63 billion, down 2 percent from $1.66 billion in the same nine months in 2016. Net income for the nine months was down nearly 56 percent year over year to $5.7 million from $12.9 million last year.

On Aug. 9, in an effort to boost the value of the company's stock, PCM's board increased the company's share repurchase program by $10 million, bringing the current authorized share repurchases up to $14.1 million.

Black Box Network Services

CEO: Joel Trammell

Dec. 30, 2016: $15.25

Dec. 29, 2017: $3.55

Change: -76.72%

On Nov. 17 Black Box's board of directors named a new CEO, the company's second in as many years, appointing Joel Trammell to replace E.C. Sykes, who retired effective immediately. The change came in the wake of continued financial troubles for the Lawrence, Pa.-based telecom services specialist, which is No. 40 on the 2017 CRN Solution Provider 500.

For the first six months (ended Sept. 30) of fiscal 2018, Black Box reported revenue of $385.8 million, down nearly 12 percent from $437.2 million in the first half of fiscal 2017. The company reported a loss of $21.1 million for the first half of fiscal 2018 compared with a loss of $6.6 million in the same period one year before.

Ciber

CEO: Michael Boustridge

Dec. 30, 2016: $0.63

April 10, 2017: $0.11

Change: -82.54%

Ciber, No. 43 on the CRN Solution Provider 500 in 2016, struggled in the past year to turn its business around, even hiring a consulting firm in October 2016 to help it explore strategic alternatives. Through 2016 and in the first quarter of 2017 the company sold off a number of its business operations, including operations in Europe and its Infor service practice, as it faced a March 31 deadline to pay off a $28.2 million Wells Fargo loan.

On April 10 Ciber filed for Chapter 11 bankruptcy protection. Ciber's stock fell to $0.05 per share and the New York Stock Exchange suspended trading of Ciber shares and began proceedings to delist the stock.

On June 22 HTC Global Services, a provider of IT and IT-enabled services based in Troy, Mich., bought Ciber for $93 million, acquiring Ciber's Indian and North American operations and its 3,500 employees.

Because Ciber's shares lost nearly all of their remaining value before trading was suspended in April, the company ranks at the bottom of our channel company watch list for 2017.