Distributor Avnet posted strong growth, finishing its third quarter on April 2 with sales up 40 per cent and income up almost 50 per cent compared to the year-ago quarter.
That growth matched its “average” year-over-year growth in recent quarters, and represented a sequential drop of about 12 per cent, ahead of the 16-20 per cent drop the distributor usually sees between its fiscal second and third quarters.
For the quarter, Avnet came in with $6.67 billion (U.S.) in sales and profits of $169.7 million, for earnings of $1.10 per share.
And the company’s Canadian operations played a major role in the year-over-year growth the distributor enjoyed.
Gallagher called the company’s Canadian business “as consistent a growth market as anyplace in the world” for the distributor, and noted that Avnet has doubled its business in Canada since 2007. While some of that growth has been courtesy of its purchase of Bell Microproducts last year, Gallagher said that it’s largely been organic, and that growth in Canada has been typically 25 to 30 per cent higher than what it’s seeing in its home market.
“We continue to see success in Canada,” he said. “It’s been very positive for us and for the market as well.”
Gallagher’s Avnet Technology Solutions organization brought in $2.7 billion, largely powered by industry-standard servers and storage. Call it a continuing hardware refresh cycle, but it’s also seeing storage grow at an accelerated rate, to the point where it’s reaching parity with the distributor’s servers business. And as the cloud continues to gain prominence in businesses of all sizes, Gallagher said that hardware refresh would continue to accelerate.
It’s also pushing the distributor in new directions, and while Gallagher admits the channel in general and Avnet in particular are still carving out their place in the cloud, he sees an important role for the distributor to play both in developing cloud-based solutions for its partners, and helping partners get ready for new offerings from its top vendors.
For the next quarter, Gallagher said he expects to see growth of between three and seven per cent, powered by continued growth in core servers and storage businesses, as well as new cloud-based services and other opportunities.
“We expect continued opportunities for double-digit growth in the security area and that will get even bigger as the cloud comes more into play,” Gallagher said. “Networking and communications is also a tremendous growth opportunity for us.”
The distributor will continue to be buoyed by the anticipated completion of the Bell Micro integration in Europe as well as its ongoing integration of ITX in Australia.
He also said partners can expect to see continued expansion of its base of SolutionsPath methodologies. He declined to comment on when we might see additional “Paths” offered to the program, but hinted the distributor will eye additional vertical markets.
“We are committed to and focused on value distribution and raising the bar,” he said. “We’ll continue to go down that path, no pun intended.”