PC Connection Beats Q3 Estimates

The Merrimack, N.H.-based company reported $403.1 million in sales, down 8.7 percent from $441.4 million in the same quarter last year. The company earned $2.9 million, or 11 cents per share, compared with earnings of $3.2 million, or 12 cents per share, last year. Analysts had forecast earnings of 7 cents per share on sales of $388.1 million.

Sales to public sector clients continued to flourish for PC Connection in the quarter. Revenue in that segment increased 9.3 percent to $116.6 million due to solid federal contract sales and strong gains in the K-12 education market, according to the company.

PC Connection said sales to SMB customers fell 16 percent to $182.6 million in the quarter, reflecting reduced capital spending by that market. The company's More Direct subsidiary, which sells to large accounts, saw sales fall 11.4 percent to $103.9 million.

The company's performance was an improvement from the second quarter, which saw sales fall 16 percent on a year-over-year comparison.

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Notebooks and PDAs accounted for the largest share of revenue, 15 percent, but sales fell 12 percent in that category compared with the prior-year quarter. Higher unit sales were offset by lower average selling prices as the growth of netbook sales impacted revenue, according to PC Connection.

Software sales fell just 1 percent vs. last year as strong federal sales offset declines to corporate customers. Desktop and server revenue fell 4 percent, while accessories and other products fell 3 percent. Increases in point-of-sale and mobile computing accessories were strong contributors in the quarter, according to the company.

"During the third quarter, we continued to experience the effects of conservative buying patterns, longer sales cycles and competitive pricing pressures," said Patricia Gallup, chairman and CEO of PC Connection, in a statement.

Analysts are forecasting earnings of 8 cents per share and sales of $396.3 million in the current quarter, although PC Connection did not provide new guidance for the quarter.