Tech Data Reports 2 Percent Profit Growth Despite Sales Decline

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Tech Data reported modest growth for fiscal 2013, in keeping with the overall industry during the difficult economic year.

Net income for the fiscal year ended Jan. 31 was reported at $214.6 million, or $5.48 per diluted share, and can be compared to respective numbers of $206.4 million and $4.66 per diluted share during the year-ago period. Net sales for the recently ended fiscal year were $25.4 billion, marking a decrease of 4 percent from $26.5 billion for the previous fiscal year, but the overall growth stems from increased efficiencies.

For the fourth quarter, net income was reported at $82.5 million or $2.17 per diluted share compared to $54.1 million or $1.29 per diluted share during the prior fourth quarter. Net sales for the fourth quarter were $7.5 billion, which is an increase of 5 percent from $7.1 billion during the year-ago period.

[Related: Tech Data Launches Brocade Recruitment, Enablement Initiative]

"We sold $25.4 billion of technology for the year, so that says there's a lot of activity and a lot of sales opportunity out there," CEO Bob Dutkowsky told CRN. "We grew 2 percent for the year, which we think is reflective of the market. It was a challenging year with the European economy under duress, and it didn't get much better over the course of the year. Then there was the fiscal cliff and the presidential election, and I think all that stuff had an impact on the health and well-being of the economy. It was a tough year for business."

Dutkowsky added that he does not expect the steep cuts stemming from the sequester to impact his company's sales, given that Tech Data has a relatively small federal business, and focuses instead on the SMB.

But in terms of areas that stimulate growth, Dutkowsky pointed to the mobile revolution as a key opportunity for success.

"There has been a sea change in technology over the last couple of years with the growth of the mobile side of the world, particularly tablets and smartphones," he said. "Four years ago, we sold virtually no tablets; three years ago we sold $300 million worth of tablets. Two years ago we sold $1 billion worth of tablets, and in the year we just reported, we sold $2 billion worth of tablets. I don't think that in our wildest dreams we thought this was going to happen."

Although PCs, laptops and netbooks have seen corresponding declines, Dutkowsky feels that tablets, and tablet-related distribution opportunities, are here to stay.

"I think the manufacturers are going to create a lot more of these hybrid devices, combining touch-enabled laptops with tablets," he said. "This creates new opportunities for us."

Among the strategy shifts for fiscal 2013, Tech Data terminated its businesses in Brazil and Colombia.


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