PC Sales, IT Demand Drive Tech Data Sales

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Earnings are up for Tech Data in the second quarter, in part due to a revitalization in the PC market and a bump in the dwindling IT-demand environment, according to the company’s chief. 

In an earnings call Tuesday, Tech Data reported sales were up for the second quarter compared to last year by 8.1 percent, from about $6.3 billion in 2013 to $6.8 billion today. Net income for the quarter ending on July 31 was placed at $42.9 million compared to $27.9 million for the second quarter in 2013 with figures placed at $39.3 million this year compared to about $14.7 million in 2013 following the generally accepted accounting principles (GAAP) standard. The numbers were set at $52.8 million in net income for this year’s first half compared to $32.5 million for 2013.

Earnings per share was ranked at $1.03 for Tech Data’s second quarter in 2014 compared to $.38 for the same time frame in 2013.

[Related: Tech Data CEO Highlights 'Best First Quarter Ever' in Q1]

For both the first and second quarters combined, excluding charges under non-GAAP, net income was set at $70.5 billion for this year, excluding charges, compared to the same the year before at about $53 billion for the period ending in July. Earnings per share was marked at $1.12 for this year compared to $.73 from the year before.

“It was a good market, and then Tech Data executed exceptionally well in a good market,” CEO Robert Dutkowsky told CRN following the call. “…We were able to have the right products at the right price. And we were able to connect with the right customers who want those products.”

On top of that, Dutkowsky said a boost in the U.S. economy and more jobs created recently has allowed businesses to invest in their technology infrastructure and upgrade where they may have held off in the past. He said Clearwater, Fla.-based Tech Data is seeing people go back to PCs for their work and beyond over tablets. There’s also a boost in purchases of convertibles, like tablets with keyboards.
“All of that stuff is kind of the nouveau thing to buy today,” he said.

Other high growth areas for Tech Data included software, up 5 percent, data center businesses, up 7.5 percent, and tablet sales, which were down 2 percent up the average selling price was up 7 percent, Dutkoswky said. He noted printers were not as robust in sales as they have been, though that could be due to businesses holding onto them for longer periods of time.

Tech Data’s increase in earnings comes on the heels of an announcement the company partnered with Xerox this month. Dutkowsky said Xerox has outsourced its supply chain to his company in North America, so now Tech data ships out their products on the corporate giant’s behalf to VARs. The move is a "big win" for the distributor, he added.

The outlook for Tech Data is strong, according to Dutkowsky added, who said he believes PC sales will continue to stabilize. With the end of Windows Server 2003 support, by next summer he estimated Microsoft will draw a lot of support and the IMB-Lenovo x86 deal will create some opportunities in the channel as well.

“It’s going to be another couple of exciting quarters for industry and therefore for Tech Data,” he said.

Sarah Kuranda contributed to this story.


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