Tech Data Eyes New Opportunities, Acquisitions

The Clearwater, Fla., distributor has spent the last couple of years fixing its Europe, Middle East and Africa (EMEA) operations but is now ready to look externally at new opportunities, new technology and possibly new acquisitions, according to CEO Bob Dutkowsky.

"My 45-day assessment is that the company has been very inwardly focused over the last couple of years, and rightfully so. EMEA has not been performing well, and we've had barrels and barrels of management energy directed toward improvement. Now that those initiatives are in closure, we are all externally focused," Dutkowsky said Tuesday after Tech Data reported its third-quarter results. The earnings announcement was Dutkowsky's first since he succeeded Steve Raymund as CEO on Oct. 1.

"We'll pick the right technologies and take advantage of the [vendors'] R&D budgets. We'll have the right focus on customer segments and target where real growth is, for example in the SMB space," Dutkowsky said.

"We'll look at adjacent markets and technologies and ask, could we distribute that through our logistics system with our IT infrastructure? Are there other geographies to apply our strength to?" he said. "Asia is a geogprahy we could look at, but there are other adjacent geographies such as Eastern Europe, where there is aggressive IT growth and the channel is immature. A company like Tech Data could get in and establish a position of leadership."

Distributor consolidation has accelerated recently with deals such as Arrow Electronics' acquisition of Alternative Technology and Avnet's purchase of Access Distribution. Still, plenty of opportunities are available, Dutkowsky said.

"I can't turn back the clock over the last number of years. I don't think we missed anything that we can't do," Dutkowsky said. "There are a dozen things we're looking at right now. Not all acquisitions, but opportunities are out in the marketplace. The question is whether we take advantage of those. If so, what do we do? If not, what should we do? Those are the things I can worry about. Is every great opportunity gone? I don't think so. Did we miss a few? I don't feel like we did. We needed to fix EMEA."

With Dutkowsky at the helm of Tech Data, VARs shouldn't expect a dramatic change from Raymund's fiscally conservative approach. The distributor's Americas sales rose 5.8 percent in the third quarter, below that of competitors Ingram Micro and Synnex. Dutkowsky plans to continue Tech Data's strategy of not chasing less-profitable business.

"The overall IT industry is a single-digit industry. Theoretically, distribution ought to grow 5 percent to 7 percent. As more products come on the market, the opportunity to grow faster is there," Dutkowsky said. "I mentioned three times this morning that we would pursue 'responsible revenue growth.' We would grow profitably, and not in a manner that doesn't make sense to our shareholders."