Tech Data Beats Q3 Estimates On Rising Demand

The company reported fiscal third quarter 2004 revenues of $4.4 billion and earnings of $26.5 million or 46 cents per share. That compares to the year earlier period when the company had revenues of $3.8 billion and profits of $32.8 million or 57 cents per share.

Consensus estimates for the period ended Oct. 31, were earnings of 43 cents per share and sales of $4.16 billion.

Tech Data Chairman and CEO Steve Raymund said he sees IT demand calendar 2004 growing between 5 percent and 6 percent. For Tech Data's third quarter. He said the company saw particular strength in mobility products, security, wireless, plasma monitors and supplies. "We expect VARs and the SMB segment will be the strongest , especially because enterprise spending particularly in North America has been slow to recover," Raymund said

Raymund also said that the company felt margin pressure in the U. S. during the quarter from Synnex. "We clearly felt pressure from our competitors, one of which went public today [Synnex]," he said.

But he added that Tech Data was prepared to meet Synnex's challenge and that the company has been able to maintain market share and achieve profitability. "We took decisive and aggressive action on our cost structure and we have the ability to be very competitive in North America."

Raymund also said that Tech Data would continue to fare well in Europe despite Hewlett-Packard's move to take more European business direct. "HP is also in the process of paring down the number of distributors and resellers but the remaining ones will get a larger slice of the pie," he said.

HP products accounted for 32 percent of the company's revenue during the period, but HP systems in the U. S. account for only 3 percent of Tech Data's worldwide revenue, Raymund said.

"The message is that (HP systems sales) in the U. S., where the strategy to sell direct has been the most aggressive, are no longer such a critical piece of our business," he said.

Tech Data anticipated revenues for its fiscal fourth quarter ending January 31, 2004 to be in the $4.5 to $4.6 billion range with net income falling between $29 million and $32 million.