The Best And Worst Channel Company Stocks In The First Half Of 2015

Losers Lead Gainers In The First Half Of 2015

In 2014, the ratio of channel company stock gainers to losers was about two-to-one. But the fortunes of some of the publicly held channel companies followed by CRN have reversed in 2015. Of the 25 publicly traded solution providers and distributors on our watch list, 14 recorded share-price declines in the first half of 2015 ended June 30, while only 11 saw their share prices increase.

How does that compare to the stock market overall? That was also split: In the first half, the Dow Jones Index was down 1.14 percent while the Nasdaq was up nearly 5.30 percent.

Here's a look at which solution providers' stock did well in the first half of 2015, and which ones did not.

Cognizant Technology Solutions

CEO: Francisco D'Souza

Dec. 31, 2014: $52.66

June 30, 2015: $61.09

Change: +16.01%

For the six months ended June 30, Cognizant reported revenue of just under $6.0 billion, up more than 21 percent from $4.94 billion in the same period in 2014. Net income for the first half of 2015 was $803.0 million, up more than 11 percent from $720.8 million in 2014.

Cognizant is No. 8 on the CRN Solution Provider 500. Cognizant's recent growth has gotten a boost from the Teaneck, N.J.-based company's increasing emphasis on health-care IT technology and services.

Insight Enterprises

CEO: Kenneth Lamneck

Dec. 31, 2014: $25.89

June 30, 2015: $29.91

Change: +15.53%

Insight Enterprises, based in Tempe, Ariz., recorded sales of $2.64 billion in the first six months of 2015 ended June 30. That was up less than 1 percent from sales in the same period in 2014. Earnings, however, were down 6 percent year over year to $36.5 million.

In April, Insight, No. 13 on the CRN Solution Provider 500, was awarded a contract as part of a broader $20 billion NASA acquisition for IT hardware, software and services.

Insight's profits took a hit in 2014 due to cuts to Microsoft's cloud sales commissions and Office 365 incentive fees. In February, the company said it expected the changes to result in a multimillion-dollar earnings hit in 2015.

Accenture

CEO: Pierre Nanterme

Dec. 31, 2014: $89.31

June 30, 2015: $96.78

Change: +8.36%

Accenture reported that revenue for the first three quarters of fiscal 2015 ended May 31 was $24.55 billion, up 4 percent from $23.61 billion in the same period in fiscal 2014. Net income for the three quarters climbed nearly 3 percent to $2.49 billion from $2.42 billion one year before.

On June 29, Accenture, No. 2 on the CRN Solution Provider 500, completed its acquisition (announced in May) of Javelin Group, a provider of strategy consulting and digital transformation services for the retail industry.

Also in May, the company launched its Advanced Analytics Applications Platform for industry- and function-specific big-data applications.

SS&C Technologies

CEO: William Stone

Dec. 31, 2014: $58.49

June 30, 2015: $62.50

Change: +6.86%

For the first half of 2015, SS&C Technologies, No. 38 on the CRN Solution Provider 500, reported revenue of $418.5 million, up almost 12 percent from $374.5 million in the first half of 2014. Net income was up nearly 22 percent year over year to $65.4 million in the first half of 2015 from $53.7 million in the first half of 2014.

In February, SS&C announced a deal to acquire Advent Software, a provider of software and services for the global investment management industry, for approximately $2.7 billion. The acquisition was completed in July.

SS&C also said it saw continued growth for the SS&C HiPortfolio (investment and fund accounting applications) and Anova (investment data management and analytics) products, part of the Windsor, Conn.-based company's acquisition of DST Global Solutions in December.

Syntel

CEO: Nitin Rakesh

Dec. 31, 2014: $44.98

June 30, 2015: $47.48

Change: +5.56%

For the first six months of 2015, Syntel, based in Troy, Mich., reported revenue of $460.4 million, up nearly 3 percent from $447.8 million in the same period last year. Net income, however, was down more than 14 percent from $117.4 million in the first half of 2014 to $100.6 million this year.

In June, Syntel, No. 36 on the CRN Solution Provider 500 list, struck a partnership with defense giant Raytheon and its Websense cybersecurity business to bring security forensics and analytics tools to its enterprise business customers.

PCM

CEO: Frank Khulusi

Dec. 31, 2014: $9.52

June 30, 2015: $10.03

Change: +5.36%

In March, PCM, No. 29 on the CRN Solution Provider 500, announced a deal to acquire the assets of En Pointe Technologies for $15 million, and the acquisition was completed April 1. En Pointe was No. 42 on the 2014 CRN Solution Provider 500.

For the first six months of 2015, PCM, based in El Segundo, Calif., reported a surge of more than 17 percent in sales to $774.8 million from $660.3 million in the first half of 2014. But the company reported a $3.3 million loss for the period due to a one-time charge of $5.4 million to cover the costs of a corporate reorganization.

Computer Sciences Corp.

CEO: Mike Lawrie

Dec. 31, 2014: $63.05

June 30, 2015: $65.64

Change: +4.11%

After months of rumors and speculation, Computer Sciences confirmed on May 19 that it will split into two publicly traded companies, one focused on its $8.1 billion commercial business and the other on its $4.1 billion U.S. government services. The Falls Church, Va.-based company expects to complete the split by Oct. 25.

In June, CSC, No. 2 on the CRN Solution Provider 500, agreed to pay $190 million to the U.S. Securities and Exchange Commission to settle multiple accounting fraud charges.

Perficient

CEO: Jeffrey Davis

Dec. 31, 2014: $18.63

June 30, 2015: $19.24

Change: +3.27%

For the first six months of 2015, St. Louis-based Perficient, No. 56 on the CRN Solution Provider 500, reported revenue of $219.1 million, up more than 2 percent from $213.9 million in the first half of 2014. But net income for the period was down nearly 15 percent to $8.1 million from $9.4 million one year before.

In early January, Perficient completed its acquisition of the assets of Zeon Solutions, an IT services and consulting firm specializing in developing, implementing and supporting e-commerce systems. The acquisition, the latest in a string of acquisitions by Perficient over the last several years, was announced in December.

CGI Group

CEO: Michael Roach

Dec. 31, 2014: $38.16

June 30, 2015: $39.08

Change: +2.41%

For the first three quarters of CGI Group's fiscal 2015 ended June 30, the solution provider reported revenue of Canadian $7.70 billion (U.S. $5.89 billion), down almost 4 percent from Canadian $8.02 billion (U.S. $6.13 billion) in the first three quarters of fiscal 2014.

Montreal-based CGI, No. 15 on the CRN Solution Provider 500, is more profitable this year, however. Net earnings grew more than 15 percent year over year to Canadian $744.7 million (U.S. $569.9 million) in the first three quarters of fiscal 2015 from Canadian $645.7 million (U.S. $494.4) in the same period one year before.

In May, the company announced a plan to buy back for cancellation up to 5,940,000 shares of its Class A stock.

ePlus Technology

CEO: Phillip Norton

Dec. 31, 2014: $75.69

June 30, 2015: $76.65

Change: +1.27%

For its first quarter of fiscal 2016 ended June 30, ePlus Technology, No. 32 on the CRN Solution Provider 500, reported sales of $269.9 million, down less than 1 percent from $272.3 million in the same period one year before. Net earnings in the first quarter for the Herndon, Va.-based company were $8.8 million, down 7 percent from $9.5 million one year earlier.

PC Connection

CEO: Timothy McGrath

Dec. 31, 2014: $24.55

June 30, 2015: $24.74

Change: +0.77%

PC Connection, No. 20 on the CRN Solution Provider 500, reported sales of $1.21 billion for the first six months of 2015, up 1.3 percent from $1.19 billion in the first half of 2014.

Merrimack, N.H.-based PC Connection recorded net income of $20.1 million for the six-month period, up nearly 9 percent from $18.6 million in the same period one year before.

CDW

CEO: Thomas Richards

Dec. 31, 2014: $35.17

June 30, 2015: $34.28

Change: -2.53%

CDW, No. 6 on the CRN Solution Provider 500, is the first company on our channel stocks index to record a stock price decline in the first half of 2015.

For the first six months of the year, CDW, based in Vernon Hills, Ill., reported sales of $6.07 billion, up more than 5 percent from $5.76 billion in the first half of 2014.

In an expansion of its cloud offerings, CDW in May unveiled a suite of managed services for Microsoft's Azure cloud platform, including monitoring and management, managed storage, backup and restore, virtual machine and operating system management, and network and connectivity.

Ciber

CEO: Michael Boustridge

Dec. 31, 2014: $3.55

June 30, 2015: $3.45

Change: -2.82%

Ciber spent most of 2014 working through restructurings and layoffs under a plan announced in July. The efforts appear to have paid off as the company, No. 37 on the CRN Solution Provider 500, has turned itself around in 2015.

For the first six months of 2015, revenue was $399.9 million, down more than 7 percent from $432.7 million in the first half of 2014. But net earnings for the Greenwood, Colo.-based company have rebounded with the company reporting a profit of $5.3 million versus a $1.5 million loss in the first half of 2014.

Arrow Electronics

CEO: Michael Long

Dec. 31, 2014: $57.89

June 30, 2015: $55.80

Change: -3.61%

For the six months ended June 27, distributor Arrow Electronics reported sales of $10.83 billion, up less than 1 percent from $10.76 billion in the first half of 2014. Net income for the first six months of 2015 was down more than 2 percent year over year to $230.0 million from $235.0 million last year.

In March, distributor Arrow Electronics, based in Englewood, Colo., acquired immixGroup, a fast-growing Washington, D.C.-area value-add distributor and solution provider, to expand Arrow's position in the federal government IT market. In May, it completed the acquisition of ATM Electronic Corp., a leading electronic component distributor based in Taipei, Taiwan.

ManTech International

CEO: George Pedersen

Dec. 31, 2014: $30.23

June 30, 2015: $29.00

Change: -4.07%

ManTech International, No. 24 on the CRN Solution Provider 500, was in acquisition mode in the first half of 2015. In April, it bought Welkin Associates, a CSC subsidiary that provides engineering services to the intelligence community and the U.S. Department of Defense, for $34 million. In June, it acquired cybersecurity consulting firm Knowledge Consulting Group.

For the six months ended June 30, ManTech, based in Fairfax, Va., reported revenue of $754.7 million, down more than 17 percent from $915.4 million in the first half of 2014. But net income for the period was up nearly 40 percent year over year to $24.2 million from $17.3 million.

Avnet

CEO: Rick Hamada

Dec. 31, 2014: $43.02

June 30, 2015: $41.11

Change: -4.44%

For its fiscal year ended June 27, distributor Avnet reported sales of $27.92 billion, up 1.5 percent from $27.50 billion in fiscal 2014. Net income for the year was $571.9 million, up nearly 5 percent from $545.6 million in fiscal 2014.

Executives at Phoenix-based Avnet have hinted that the company is mulling acquisitions in software, services and converged solutions, as demand for data center, networking and storage products continues to climb.

ScanSource

CEO: Mike Baur

Dec. 31, 2014: $40.16

June 30, 2015: $38.06

Change: -5.23%

ScanSource reported in May that sales of its core bar-coding business were down more than 7 percent in its third fiscal quarter ended March 31. But sales from the Atlanta-based solution provider's rapidly growing communications and services operations surged by more than 50 percent.

CACI International

CEO: Kenneth Asbury

Dec. 31, 2014: $86.18

June 30, 2015: $80.89

Change: -6.14%

CACI's primary business is serving the federal government and, in June, the company announced it had been awarded two task orders valued at a total of $29.8 million to provide IT legal support services for the U.S. Securities and Exchange Commission.

Also in June, Arlington, Va.-based CACI said it expected revenue for fiscal 2016, which began July 1, to be in the range of $3.3 billion to $3.5 billion with net income in the range of $130 million to $140 million.

CACI, No. 16 on the CRN Solution Provider 500, reported that revenue in its fiscal year ended June 30 was down 7 percent to $3.31 billion from $3.56 billion in fiscal 2014.

Synnex Corp.

CEO: Kevin Murai

Dec. 31, 2014: $78.16

June 30, 2015: $73.19

Change: -6.36%

For its second fiscal quarter ended May 31, distributor Synnex reported revenue of $3.25 billion, down nearly 6 percent from $3.45 billion in the same quarter one year earlier. Net income was up 31 percent, however, to $51.9 million from $39.6 million one year before.

Executives at Fremont, Calif.-based Synnex said the company had walked away from several low-margin deals during the quarter, leading to the reduced sales.

Tech Data Corp.

CEO: Robert Dutkowsky

Dec. 31, 2014: $63.23

June 30, 2015: $57.56

Change: -8.97%

In June, distributor Tech Data Corp. acquired certain assets of Signature Technology Group, a provider of data center and professional services.

Also in June, Tech Data, based in Clearwater, Fla., announced a $100 million share repurchase program.

For its first fiscal quarter ended April 30, Tech Data reported sales of $5.89 billion, down more than 12 percent from $6.73 billion in the same quarter one year before. But net income nearly tripled to $51.3 million in the quarter compared to $13.5 million one year earlier.

I ngram Micro Inc.

CEO: Alain Monie

Dec. 31, 2014: $27.64

June 30, 2015: $25.03

Change: -9.44%

For the first six months of Ingram's fiscal year ended July 4, the Santa Ana, Calif.-based distributor reported sales of $21.20 billion, down less than 1 percent from $21.29 billion in the same period one year before.

But net income for the six months was just under $9.0 million compared to earnings of $75.4 million one year earlier. The latest earnings included reorganization, integration and other transition costs associated with the implementation of cost-savings plans and recent acquisitions.

Black Box Network Services

CEO: Mike McAndrew

Dec. 31, 2014: $23.90

June 30, 2015: $20.00

Change: -16.32%

For its first fiscal quarter ended June 27, Pittsburgh-based Black Box reported revenue of $229.2 million, down more than 6 percent from $245.2 million in the same period one year earlier. Net income for the quarter was $800,000, down almost 80 percent from $3.9 million one year ago.

Black Box is No. 34 on the CRN Solution Provider 500.

Datalink

CEO: Paul Lidsky

Dec. 31, 2014: $12.90

June 30, 2015: $8.94

Change: -30.70%

Datalink has been expanding into IT consulting in the past year, staffing up its consulting business with more than 100 employees, and looking for acquisitions in Florida, Texas and Ohio.

For the first six months of 2015, Datalink reported sales of $358.0 million, up nearly 20 percent from $298.9 million in the first half of 2014. Net income, however, was only $647.0 million, down more than 83 percent from $3.86 billion in the same period one year before. The decline was due to first-quarter costs associated with the acquisition of Bear Data Solutions in October, and lower overall gross margins.

Based in Eden Prairie, Minn., Datalink is No. 43 on the CRN Solution Provider 500.

Unisys

CEO: Peter Altabef

Dec. 31, 2014: $29.48

June 30, 2015: $19.99

Change: -32.19%

In April, Unisys revealed a $300 million restructuring plan, including the layoff of more than 1,800 employees, in an effort to turn the company around. In January, new CEO Peter Altabef said Unisys, No. 19 on the CRN Solution Provider 500, would focus on deepening its domain-specific expertise and develop software to differentiate its services business.

For the first six months of 2015, Unisys, based in Blue Bell, Pa., reported revenue of $1.49 billion, down more than 5 percent from $1.57 billion in the first half of 2014. The solution provider's net loss grew to $101.4 million for the six-month period compared to the $65.6 million loss in the first half of 2014.

The company's second-quarter loss of $58.2 million included $53 million in severance and reorganization costs associated with the layoffs announced in April.

Systemax

CEO: Richard Leeds

Dec. 31, 2014: $13.50

June 30, 2015: $18.64

Change: -36.00%

In March, Systemax, No. 17 on the 2014 CRN Solution Provider 500, announced a major restructuring that would cut costs and shutter the company's retail business. That news followed the announcement of the company's year-end earnings that included a multimillion-dollar loss.

For the first six months of 2015, Systemax reported sales of $1.53 billion, down more than 10 percent from $1.70 billion in the first half of 2014. The Port Washington, N.Y.-based company's loss in the six-month period widened to $57.0 million compared to a net loss of $9.2 million in the first half of 2014.