Raymund Speaks Out On Growth, Opportunities, HP

"We are seeing fairly steady growth of mid-single digits [in the Americas]," said Raymund in an interview with CRN after the distribution giant posted better than expected results for its second fiscal quarter. "We are not seeing wild fluctuations in our daily ship rates. So business feels like it is stable and reasonably solid. It probably has never been less spiky in terms of the tone and feel of the overall business."

For the second fiscal quarter ended July 31, Tech Data posted net income of $30.7 million on a 10 percent increase in sales to $4.6 billion. U.S. Sales in the Americas were up 4 percent in the quarter to $2.1 billion, accounting for 45 percent of total sales.

The earnings per diluted share of 52 cents for the quarter were above the 49 cents per share Wall Street consensus, according to analysts surveyed by Thomson/First Call. In after hours trading, Tech Data shares were up 4 percent or $1.60 to $39.05.

Raymund said second-quarter highlights include strong year-over-year sales growth for telephony, components, digital imaging, Point of Sale (POS) data capture, software licensing and supplies and accessories.

"While we have heard various rumors and discussions about demand and price fluctuations throughout the quarter, the story from our perspective clearly comes down to execution," said Raymund. "No doubt the Americas can be described as extremely competitive, but we have been able to successfully navigate much tougher times and that experience has served us well."

Raymund described Tech Data as well-positioned for the second half of its fiscal year to capitalize on industry opportunities. Tech Data said it expects sales for the current quarter ended Oct. 31 of $4.65 to $4.8 billion. The company expects net income for the quarter to be in the range of $30.5 million (52 cents per share) to $33.5 million (57 cents per share).

Hewlett-Packard sales represented 27 percent of Tech Data's sales in the quarter, down from 31 percent in the year ago quarter. Raymund said that the major reason for the fall off in the HP business is a move by the company to "pursue a more hybrid-oriented channel model, which means that distribution as a segment captures less."

As to where the HP business will level off with Tech Data, Raymund said it "depends on HP's broader performance in the marketplace and their strategy with respect to how closely they want to partner with distribution or decide to in-source some of the services we provide to them. That is something that will probably evolve over time."

"They are a valued vendor and they represent more than a quarter of the business. To the extent they are interested in utilizing our services to help them efficiently reach a very broad marketplace, we are there ready and willing to help them," said Raymund. "If they determine that other channels or partners are better for them in some instances, then so be it. We'll find something else to do."

Raymund said that Acer and IBM are exploring opportunities on working more closely with distribution and are generating interest among VARs.