A slow week in distribution unless your company starts with an “A”. With solution providers pushing out more cloud ready solutions the need for more lifecycle management capabilities is increasing in the channel.
This week Avnet (NYSE:AVT) made a smart move to offer more in this area by acquired Canvas Systems, an independent supplier of IT hardware and services specializing in IT lifecycle. These services include remarketing, refurbishment and environmentally compliant asset disposal services. Canvas also provides a secure way for customers to refresh data centres. This transaction is expected to be immediately accretive to earnings and supports Avnet’s long-term return on capital goal of 12.5 per cent.
Jeff Bawol, president, Avnet Technology Solutions, Americas, said Canvas enhances Avnet’s IT lifecycle management servicesa capabilities and supports the company’s strategy to deliver best in class solutions that help business partners consistently achieve profitable growth and gives the distributor the ability to deliver a seamless solution at any phase in the IT lifecycle and provides its suppliers an additional channel for capturing brand loyalty in the secondary market.
From a Canadian perspective, Canvas services customers worldwide. The company generated revenue of approximately US$122 million in the 2011. Canvas also has some reach with business units not just in the U.S., but also in the U.K. and the Netherlands. This acquisition will be integrated into the operations of Avnet Technology Solutions, further enhancing its services offering.
Avnet also announced this week that completed its Pinnacle Data Systems, Inc. acquisition has been completed. The acquisition was accretive to earnings and supports Avnet’s return on capital goal of 12.5 per cent, which is what the company stated at the outset.
Pinnacle is a provider of application-specific hardware and global support solutions for the world’s largest OEMs and will now be part of Avnet Integrated Resources. Avnet continued its busy will be revealing its financials for the quarter. Sales for the quarter ended declined slightly year over year, both on a reported and pro forma basis, to $6.69 billion. Adjusted operating income of $265.4 million did increased be 3.4 per cent from a year ago. Operating income margins also increased by 17 basis points to 3.96 per cent.
CEO Rick Hamada said the macro environment presented some top line challenges for Avnet but the team did a good job adjusting to market conditions and delivered another strong quarter with improvements across many parts of our business.
Financial news was a lot brighter at Arrow
Arrow (NYSE:ARW) also released its numbers this week. Arrow reported Record Q4 non-GAAP earnings per share of $1.38. The company’s fourth-quarter net income of $174.1 million on sales of $5.44 billion, compared with net income of $157.9 million on sales of $5.24 billion in the fourth quarter of 2010.
Arrow’s net income for 2011 was $598.8 million on sales of $21.39 billion, compared with net income of $479.6 million on sales of $18.74 billion in 2010. Cash flow from operations for the year ended December 31, 2011 was $121 million. Arrow chairman, president and CEO Michael J. Long said, this has again been an exceptional year for Arrow as we set new financial records and successfully executed on our strategy to drive growth in our core global components and global ECS businesses as well as in high-margin lifecycle services.