But, given that January did happen, the Canadian operation was down about half of what Tech Data Americas did, which was drop about 15 per cent. The biggest problem the distributor had in the Americas regions and to some extent in Canada was the drop in currency.
”You have to understand that the Canadian dollar and the U.S. dollar was almost on par. The drop in currency was the No. 1 factor (in the performance decline). Our local revenues were down about half of the Americas. A big part of that came as a result of January. We had an OK November and a good December. Then for some reason it was like the lights were turned off. We did not know what to expect, but at the end of February things picked up and so it is not so bad,” Reid said.
Softening the blow a bit for Tech Data Canada was its significant increase in software sales.
The distributor was up 30 per cent and most of that came from McAfee, Symantec and Trend Micro security products sales as well as Oracle.
“Our areas of concern were in servers and storage which was down double digits as well as print. Those are big volume numbers for distributors and Tech Data is strong in server and storage. When those are down it take a lot of software to make it up,” he said.
With the government year end coming in March, Reid anticipates a busy month for the distributor. However, Reid has notice a certain malaise in the market place. He describes as a people waiting for things such as the decision approval process, decisions on spending on IT products and services, figuring out if customers IT situation is good enough without upgrading, waiting for better interest rates, and waiting for better vendor financing programs.
“So they think that they can get a better deal if they wait,” he added.
From a Tech Data customer perspective, Reid remains upbeat. He said that VARs are resilient and have done a great job in anticipating “this mess”.
“They have understood that the future is not in hardware margins, but in wrapping around more products and services in the sale. The smart guys know how to do it and are in areas Tech Data are participating in. They will tell you that they are doing well. If you drill down you will see they have reoccurring services revenue, they are selling service packs from HP and they are doing a good job of that. Yes, they do sell hardware, but that is not their focal-point any longer,” he said.