Tech Data’s search for a new CEO to replace the retiring Steve Raymund is nearing a close. This is according to Raymund himself, who spoke to CDN after releasing the distributor’s quarterly earnings report.
Raymund said the search process has gone slower than most people at the company expected. Logistics with arranging interviews and the broad slate of candidates that he and the search committee came up with contributed to the delay.
“The process was under way about eight months ago, and the good news is we narrowed the slate down and we are in the home stretch to finalize the deal with one candidate. An announcement may come in a few weeks, but you never know,” Raymund said.
Tech Data financials, on the other hand, did not provide any good news for the market. The company recorded a net loss of US$155.5 million for the second quarter ended July 31. This compares to a net loss of US$59.4 million. The results included a US$136.1 million goodwill loss, based mainly in Europe, along with a further US$8.4 million charge to increase the valuation allowance for certain deferred tax assets.
Net sales for the quarte were US$4.9 billion, an increase of 2.7 per cent from $4.8 billion in the second quarter of fiscal 2006 and flat sequentially as compared to the first quarter of the current fiscal year.
Raymund confirmed that the losses stemmed from the challenges in the European IT distribution market. “I think there is no question we will recover in Europe and are not bound to continue to lose money in this operation. We will eek out a profit and I am confident we will make money next year, but there is a challenge in stabilizing the company and we have seen some results in all the restructuring efforts we made. There is no question we will recover. The issue is when and how robustly,” Raymund said.
On the positive side, the distributor did do well in North America, reporting a US$37 million profit on operations. And, he is pleased with the results out of the Canadian operation and the rest of the Americas.
NexInnovations, which is currently under court-ordered creditor protection, did not have any negative impact on Tech Data’s results, said Rick Reid, Tech Data Canada president. NexInnovations, one of Canada’s largest solution providers owes the distributor a little more than $10 million.
Raymund believes NexInnovations will emerge from creditor protection in decent shape.
Reid also said that the distributor’s Canadian operation grew faster than the Americas and remains profitable.