The Best And Worst Channel Company Stocks Of The First Half Of 2017

Channel Stocks: Gainers And Losers

Stock markets got off to a roaring start in 2017 and continued an upward climb through the first half of the year, fueled at least in part by investors who expected tax cuts and fiscal stimulus spending under President Donald Trump.

So how did publicly held solution provider companies fare? It was a nearly even split with 14 of the companies on our channel watch list recording stock price increases between the start of the year and June 30 and 13 seeing stock price declines – several by significant double-digit percentages.

How does that compare to the stock market overall? As of June 30 the Dow Jones Index was up 8.03 percent while the Nasdaq was up 14.07 percent – the latter despite some index declines in June.

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

Note: On April 3 CSC merged with Hewlett Packard Enterprise's enterprise service organization to create DXC, whose stock replaces CSC on our list.

Systemax

CEO: Larry Reinhold

Dec. 30, 2016: $8.77

June 30, 2017: $18.80

Change: +114.37%

Systemax, No. 30 on the 2017 CRN Solution Provider 500, underwent some significant changes in 2016, including closing its retail business and eliminating as many as 500 jobs in an effort to cut costs.

For its second quarter ended June 30, Systemax reported sales of $313.0 million, up more than 5 percent from $297.7 million in the same quarter one year earlier. Net income from continuing operations in the quarter was $19.3 million compared with $2.3 million one year before.

SS&C Technologies

CEO: William Stone

Dec. 30, 2016: $28.60

June 30, 2017: $38.41

Change: +34.30%

SS&C, No. 33 on the 2017 CRN Solution Provider 500, reported that revenue in its second quarter ended June 30 reached $411.0 million, up more than 10 percent from $373.1 million in the same quarter one year earlier. Net income for the quarter was $51.2 million, up more than 81 percent from $28.2 million one year before.

DXC

CEO: Mike Lawrie

Dec. 30, 2016: $59.42

June 30, 2017: $76.72

Change: +29.11%

CSC struck a deal in May 2016 with Hewlett Packard Enterprise to merge with HPE's Enterprise Services operations, creating the new company DXC Technology, a $26 billion IT infrastructure, services and solutions company with more than 5,000 clients in 70 countries. The deal was completed on April 3: Trading of DXC Technology stock began that day and trading of CSC shares ended.

In July DXC, No. 11 on the 2017 CRN Solution Provider 500, said that it had acquired Tribridge, a solution provider that works with Microsoft's Dynamics 365 cloud applications. Tribridge is also a managed service provider, offering its Concerto Cloud Services.

ePlus Technology

CEO: Mark Marron

Dec. 30, 2016: $57.60

June 30, 2017: $74.10

Change: +28.65%

On Feb. 2 ePlus Technology, No. 35 on the 2017 CRN Solution Provider 500, unveiled plans for a 2-for-1 stock split effective April 3, and the Dec. 30 stock price has been adjusted accordingly.

In May ePlus Technology's parent company, ePlus of Herndon, Va., acquired cloud and software development specialist OneCloud Consulting of Milpitas, Calif., in a move the company said would help it expand its DevOps and OpenStack expertise. OneCloud was also a Cisco Premier Partner.

For its fiscal 2018 first quarter ended June 30, ePlus reported sales of $367.2 million, up 23 percent from $298.5 million in the same quarter one year earlier. Net earnings for the quarter were $13.4 million, up nearly 26 percent from $10.7 million one year before.

CDW

CEO: Thomas Richards

Dec. 30, 2016: $52.09

June 30, 2017: $62.53

Change: +20.04%

In February CDW, No. 5 on the 2017 CRN Solution Provider 500, unveiled a new small-business practice aimed at e-commerce and digital delivery.

In May CDW announced that the U.S. Securities and Exchange Commission did not plan to take any enforcement action against the company following a 19-month investigation into the vendor's partner program incentives.

For its second quarter ended June 30, CDW reported sales of $3.99 billion, up 9 percent from $3.66 billion in the same quarter one year earlier. Net income for the quarter was $141.0 million, up 20 percent from $117.5 million one year before.

Tech Data

CEO: Robert Dutkowsky

Dec. 30, 2016: $84.68

June 30, 2017: $101.00

Change: +19.27%

On Feb. 27 distributor Tech Data closed its $2.6 billion acquisition Avnet's Technology Solutions business, announced in September, in a deal that reshapes the value-added distribution landscape. Acquiring Avnet's $9.65 billion Technology Solutions business is expected to boost Tech Data's data center business, growing that operation's share of Tech Data's total revenue from 29 percent to 45 percent.

On June 1 Tech Data reported that sales in its fiscal 2018 first quarter ended April 30 reached $7.66 billion, up 29 percent from $5.96 billion in the same period one year before. The company said the increase was primarily due to the approximately $1.6 billion of two months of sales from the Technology Solutions acquisition. Minus the acquisition, Tech Data said sales grew about 5 percent in the quarter.

Net income for the quarter was $30.7 million, down 8 percent from $33.4 million one year before.

Cognizant Technology Solutions

CEO: Francisco D'Souza

Dec. 30, 2016: $56.03

June 30, 2017: $66.40

Change: +18.51%

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.

In February Cognizant, No. 7 on the 2-17 CRN Solution Provider 500, reached an agreement with 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 company 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.

For the six months ended June 30, Cognizant reported revenue of $7.22 billion, up 9.8 percent from $6.57 billion in the first half of 2016. Net income for the six months was $1.03 billion, up 48 percent from $693 million in the first half of last year.

Arrow Electronics

CEO: Michael Long

Dec. 30, 2016: $71.30

June 30, 2017: $78.42

Change: +9.99%

For the first six months of 2017 ended July 1, distributor Arrow Electronics reported sales of $12.22 billion, up 6.8 percent from $11.45 billion in the first half of 2016. Net income for the period was $213.4 million, down more than 11 percent from $240.5 million in the first half of 2016.

Conduent

CEO: Ashok Vemuri

Jan. 3, 2016: $14.90

June 30, 2017: $15.94

Change: +6.98%

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 quarter ended March 31, Conduent report sales of $1.54 billion, down 7.8 percent from $1.67 billion in the same period one year earlier. The company reported a $6 million loss for the quarter compared with a $23 million loss one year earlier.

Perficient

CEO: Jeffrey Davis

Dec. 30, 2016: $17.49

June 30, 2017: $18.64

Change: +6.58%

In January Perficient, No. 57 on the 2017 CRN Solution Provider 500, acquired RAS & Associates, a 40-man management consulting firm, in a move Perficient said would expand its service capabilities in such areas as systems integration, data reporting and analytics. The $9 million RAS provides consulting services in strategy, operations and business processes.

In June Perficient 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 six months of 2017 ended June 30, Perficient reported revenue of $228.0 million, down 8.1 percent from $248.2 million in the first half of 2016. Net income for the first half of the year was $5.1 million, down 54 percent from $11.2 million in the first half of last year.

CGI Group

CEO: George Schindler

Dec. 30, 2016: $48.03

June 30, 2017: $51.07

Change: +6.33%

CGI, No. 19 on the 2017 CRN Solution Provider 500, began the year under new management. On Sept. 8, 2016, CGI announced 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 its fiscal 2017 third quarter ended June 30, CGI reported revenue of CA$2.84 billion (U.S. $2.24 billion), up 6.4 percent from CA$2.67 billion (U.S. $2.10 billion) from the same quarter one year earlier. Net earnings for the quarter were CA$276.6 million (U.S. $218.1 million), up 1 percent from CA$273.8 million (U.S. $215.9 million) one year before.

Presidio

CEO: Bob Cagnazzi

March 10, 2016: $13.50

June 30, 2017: $14.31

Change: +6.00%

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 third quarter ended March 31, Presidio reported revenue of $628.8 million, up 7.2 percent from $586.4 million in the same quarter one year earlier. But the company reported a $15.0 million loss for the quarter compared with a $6.4 million loss one year before.

Accenture

CEO: Pierre Nanterme

Dec. 30, 2016: $117.13

June 30, 2017: $123.68

Change: +5.59%

In March Accenture, No. 2 on the 2017 CRN Solution Provider 500, said it would spend $900 million to retrain 200,000 technology-focused employees in emerging IT including cloud, robotics and artificial intelligence.

Accenture has acquired a steady stream of small companies in recent years, both to enhance its current service offerings and to expand into new technology areas and vertical industries, and that has continued in 2017. In the second quarter alone the list of Accenture's acquisitions included e-commerce solutions provider Media Hive, agile transformation services supplier SolutionsIQ, federal government services company Phase One Consulting Group, and mobile systems design firm Intrepid.

For its fiscal 2017 third quarter ended May 31, Accenture reported revenue of $9.36 billion, up 4.3 percent from $8.97 billion in the same quarter last year. But net income for the quarter was $704.8 million, down nearly 26 percent from $950.3 million one year before.

CACI International

CEO: Kenneth Asbury

Dec. 30, 2016: $124.30

June 30, 2017: $125.05

Change: +0.60%

For its fiscal 2017 third quarter ended March 31, CACI, No. 16 on the 2017 CRN Solution Provider 500, reported revenue of $1.09 billion, up more than 11 percent from $977.3 million in the same quarter one year ago. Net income reached $40.4 million, up more than 18 percent from $34.1 million one year earlier.

CACI is scheduled to release its fourth quarter and fiscal 2017 year-end results on Aug. 17. The company has also issued guidance for fiscal 2018 with revenue projected in the range of $4.35 billion to $4.50 billion and net income between $165 million and $173 million.

ScanSource

CEO: Mike Baur

Dec. 30, 2016: $40.35

June 30, 2017: $40.30

Change: -0.12%

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

In May ScanSource CEO Mike Baur said that Avaya's recent Chapter 11 bankruptcy filing has led to a decline in Avaya-related sales. Avaya is one of three companies, along with Cisco and Zebra, which accounted for more than 10 percent of ScanSource's overall sales in fiscal 2016.

And in April ScanSource, which acquired master agent Intelisys last year, acquired the channel business of Kingcom, a Verizon-exclusive master agent.

CSRA

CEO: Larry Prior

Dec. 30, 2016: $31.84

June 30, 2017: $31.75

Change: -0.28%

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.

On June 23 CSRA, No. 14 on the 2017 CRN Solution Provider 500, said that it had been awarded a major $498 million "ceiling" contract by the U.S. Department of Defense's Defense Information Systems Agency (DISA) to provide private cloud infrastructure to DISA under the milCloud 2.0 Phase 1 project.

Synnex

CEO: Kevin Murai

Dec. 30, 2016: $121.02

June 30, 2017: $119.96

Change: -0.88%

On June 6 Synnex struck a deal to acquire Westcon-Comstor's $2.18 billion North American and Latin American businesses for as much as $800 million. The deal 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 will provide Synnex with a way to enter the market for Cisco's products.

For its fiscal 2017 second quarter ended May 31, Synnex reported revenue of $3.94 billion, up 16.5 percent from $3.38 billion in the same period one year ago. Net income for the quarter surged nearly 65 percent to $73.1 million from $44.4 million one year ago.

Insight Enterprises

CEO: Kenneth Lamneck

Dec. 30, 2016: $40.44

June 30, 2017: $39.99

Change: -1.11%

On Nov. 7, 2016 Insight Enterprises, No. 13 on the 2017 CRN Solution Provider 500, reached an agreement to acquire Datalink for $11.25 per share, or $258 million. Datalink, No. 45 on the 2016 CRN Solution Provider 500, was 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, a major Microsoft and Cisco channel partner based in Tempe, Ariz., completed the Datalink acquisition on Jan. 6. Insight said the acquisition strengthened its competitive position, through global scale and technical talent, in delivering on-premise and cloud data center solutions.

For its second quarter ended June 30, Insight reported sales of $1.68 billion, up 16 percent from $1.46 billion in the same quarter in 2016. Net earnings for the quarter were up 15 percent year over year to $40.3 million from $35.1 million one year earlier.

ManTech International

CEO: George Pedersen

Dec. 30, 2016: $45.25

June 30, 2017: $41.38

Change: -2.06%

ManTech scored several sizable contracts in the first half of 2017 including a $229 million contract to provide business intelligence services to the U.S. Department of Homeland Security and a $220 million contract from the FBI to provide IT infrastructure support to that agency's Criminal Justice Information Services division.

For the first six months of 2017, ManTech International, No. 31 on the 2017 CRN Solution Provider 500, reported revenue of $832.1 million, up 5 percent from $792.0 million in the first half of 2016. Net income for the period was $30.6 million, up more than 9 percent from $28.0 million in the first half of last year.

Connection

CEO: Timothy McGrath

Dec. 30, 2016: $28.09

June 30, 2017: $27.06

Change: -3.67%

Connection, No. 22 on the 2017 CRN Solution Provider 500, reported sales of $749.8 million in its second quarter ended June 30, up 11 percent from $676.2 million in the same quarter one year earlier. Net income for the quarter was $13.6 million, up 9 percent from $12.5 million in the same quarter one year before.

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

West Corp.

CEO: Tom Barker

Dec. 30, 2016: $24.76

June 30, 2017: $23.32

Change: -5.82%

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 for $5.1 billion in the largest IT industry acquisition in the first half of 2017.

The acquisition ended a six-month period during which West Corp. was reviewing strategic alternatives for its future. Apollo is paying $23.50 per share for West Corp. and assuming more than $3 billion of the company's debt, putting the total value of the deal at approximately $5.1 billion.

Apollo hopes that by acquiring West Corp. it can capitalize on customer migrations to cloud-based solutions. The deal is expected to close by the end of the year.

Syntel

CEO: Rakesh Khanna

Dec. 30, 2016: $19.79

June 30, 2017: $16.96

Change: -14.30%

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

For the first six months of 2017, Syntel reported revenue of $226.8 million, down 7.8 percent from $246.0 million in the first half of 2016. Net income for the first half of 2017 was $36.7 million, down nearly 38 percent from $58.8 million in the same period in 2016.

Unisys

CEO: Peter Altabef

Dec. 30, 2016: $14.95

June 30, 2017: $12.80

Change: -14.38%

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. 20 on the 2017 CRN Solution Provider 500, still has work to do.

For the first six months of 2017 ended June 30, Unisys reported revenue of $1.33 billion, down 6 percent from $1.42 billion in the first half of 2016. The company reported a $74.7 million loss for the six months compared with an $18.3 million loss in the first half of 2016.

PCM

CEO: Frank Khulusi

Dec. 30, 2016: $22.50

June 30, 2017: $18.75

Change: -16.66%

PCM's stock price took a hit in the first half of 2017 after the company disclosed 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, No. 25 on the 2017 CRN Solution Provider 500, said damages from the En Pointe problems exceed $57 million – more than triple the company's 2016 net income.

PCM reported sales of $1.08 billion in the first six months of 2017, up less than 1 percent compared with sales in the first half of 2016. But net income for the six months was down 13.7 percent year over year to $6.5 million from $7.6 million last year.

Avnet

CEO: William Amelio

Dec. 30, 2016: $47.61

June 30, 2017: $38.88

Change: -18.34%

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

For its fiscal 2017 third quarter ended April 1, Avnet reported sales of $4.44 billion, up 8.8 percent from $4.08 billion in the same quarter one year earlier (excluding the Technology Solutions business sold to Tech Data). Net income for the quarter was $271.8 million, more than double the $123.5 million profit in the same quarter one year before.

Black Box Network Services

CEO: E.C. Sykes

Dec. 30, 2016: $15.25

June 30, 2017: $8.55

Change: -43.93%

For its fiscal 2017 fourth quarter ended March 31, Black Box, No. 40 on the 2017 CRN Solution Provider 500, reported revenue of $208.1 million, down 7 percent from $224.1 million in the same quarter one year earlier. But the company came closer to break even, reporting a $1.8 million loss for the quarter compared with a $47.7 million loss one year before.

Ciber

CEO: Michael Boustridge

Dec. 30, 2016: $0.63

April 10, 2017: $0.05

Change: -93.65%

Ciber, No. 43 on the CRN Solution Provider 500 in 2016, struggled in the last 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 the first half of 2017.