Tech Data CEO Says Company Is In The Best Position Ever To Support The Channel

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Tech Data CEO Bob Dutkowsky said the $2.6 billion acquisition of Avnet Technology Solutions is off to a good start, reiterating that the deal will benefit channel partners and will save the combined company $100 million in corporate costs over the next two years.

“This is the beginning of an exciting new chapter in our company’s history … The channel partner community has shown an overwhelming amount of support of the new combination," Dutkowsky said.

With the addition of Avnet TS, Tech Data’s channel partners are going to benefit from the company’s larger geographic footprint, deeper educational services, skills and new emerging technology offerings, he said.

[Related: A New Distributor Dawns: Tech Data-Avnet TS Deal Closes, Avnet Partners Want To Retain Existing People, Level Of Service]

Using the Avnet TS flash and solid-state storage practice and its cloud services practices as examples of next-generation technologies that come with the acquisition, Dutkowsky said Tech Data is now in the best position it has ever been to support its channel partners.

"We believe technology will continue to proliferate and computing will continue to grow. However, as workloads increase, [businesses] are not migrating to one platform, rather distributing across an increasingly broad array of platforms," he said.

The move from legacy technology to a wider range of platforms is disrupting legacy IT markets, he said, but that technology transition creates new opportunities in the marketplace for converged and hyper-converged infrastructure, cloud, security, mobility, big data, and data analytics.

The integration of Avnet TS and Tech Data will create increased competencies in those areas so channel partners can have a distribution partner that can help them best leverage that opportunity, he said.

To properly manage that integration, Tech Data appointed Els Demeester to the role of corporate vice president, integration, last week when the deal closed. Demeester is charged with leading the integration team and ensuring the integration goes smoothly for customers, vendors, and employees of both companies.

Tech Data did not release financial guidance for the upcoming quarter but said that the company could give more detail about the new Tech Data during an investors' day meeting this fall.

Clearwater, Fla.-based Tech Data reported its Q4 and full-year earnings results Wednesday before the market opened. 

Net income for the fourth quarter, ended Jan. 31, was $78.8 million, or $2.22 a share, on sales of $7.43 billion. That was down 18 percent from net income of $96.1 million, $2.45 a share, on sales of $7.48 billion reported during the year-ago period, adjusted for one-time gains and costs. 

For the full year 2016, Tech Data reported net income of $195.1 million, $5.51 a share, on net sales of  $26.2 billion. 

Tech Data's largest vendor partners in its most recent quarter were Apple, which accounted for 24 percent of the distributor's sales, and HP Inc., which accounted for 12 percent of sales.

As the company continues its integration, Dutkowsky said Tech Data is going to make the transition smooth for partners. "We want to move forward with minimal disruption to our channel and vendor partners. In 2018, we see a flattish growth environment, so we will accelerate our capabilities and grow faster than the industry, we are committed to a high level of operational excellence," he said. 

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