Tech Data Americas President Ken Lamneck said the next three months would be a “key” proving ground and expressed confidence that Tech Data had aligned itself to pull through what’s hopefully the bottom of the recession.
“I think overall it was a record year for the company,” Lamneck said in a Channelweb.com interview. “We’ve been in recession for a year, but we’re operating well. Europe is back on track after some difficulties a few years ago, and I think we had very good operating results as well in the Americas in light of a tough environment.”
The Clearwater, Fla.-based distributor reported fourth-quarter earnings of $58.6 million, up 17 percent from $50.2 million reported for the same quarter last year. Revenue for the quarter fell 12 percent to $5.71 billion from $6.48 billion in the year-ago quarter.
For the full fiscal year, Tech Data reported earnings of $123.6 million compared to $108.3 million for the previous year, and revenue of $24.08 billion, up from $23.42 billion a year ago.
Tech Data CEO Robert Dutkowsky emphasized on the distributor’s earnings call that cost savings had helped Tech Data’s bottom line.
“We took prudent cost reduction actions throughout the year and continue to improve our inventory, pricing and freight management disciplines,” Dutkowsky said in a statement.
Profit in the Americas fell 11 percent and sales fell 14 percent, but Lamneck said the drop-off in activity in January was the difference-maker.
Technologywise, Lamneck reiterated how the economic climate was taking an especially heavy toll on systems and peripherals, but Tech Data was seeing positive growth in areas like software and virtualization.
The systems and peripherals decline, Lamneck said, were “a matter of customers being very mindful of their settings” — something Gartner also indicated in a report released earlier this week that said 2009 would see a historic drop-off in worldwide PC sales.
“What you’re seeing now [for priorities are] things that are a very obvious return on investment,” Lamneck said. “Those are the things getting the priorities and the others are being pushed back. The upgrade cycles for PCs and notebooks are being pushed out a bit. We’re OK. You can’t do it forever, but now is the time when people push things out. In November and December, you still had some budget. Right now is a delaying time.”
Lamneck said he agreed with economist predictions that Q1 in 2009 will be the bottom of the recession, but Tech Data was continuing to monitor its head count — he said its personnel expenses were 65 percent of costs — freight rates, travel and other discretionary spending. He said not to expect large-scale layoffs but that Tech Data had eliminated a few positions “here and there.”
Lamneck also said credit issues in the channel have “been a good story for us.”
“We’re providing as much credit now as we did a year ago,” he said. “When things are tight like this, [vendors] are not as geared to take the kind of credit risks that we are. You see it across the board, with people like HP (NYSE:HPQ) and Cisco (NSDQ:CSCO) driving more and more business to distributors.”
Vendorwise, Tech Data isn’t seeing much of a drop-off, and continues to add vendors including, most recently, Sharp for LCD TVs. In specific areas, it’s looking to add to its line card, especially for software and virtualization, as well as mobility.
“We’re not seeing these opportunities dry up at all,” Lamneck said.
Lamneck also said Tech Data was continuing to update its education for VARs specific to vertical markets, with health care and government the hot plays thanks to stimulus implications and a greater level of interest by VARs in both areas.