Two of the biggest bellwethers in the channel, Ingram Micro and CDW, reported year-end 2013 financial results Thursday. Their combined performance suggests that the market for information and communications technology products is healthy, but intensely competitive.
Both companies experienced strong revenue growth for the year, but saw expansion slow in the fourth quarter. For the year, Ingrams sales grew 12 percent over 2012, to $42.6 billion. CDWs annual revenue increased 6.3 percent year-over-year, to $10.8 billion.
Earnings growth for 2013 were mixed. For the year, Ingrams net income rose 1.5 percent to $310.6 million, while CDWs jumped 11.6 percent to $132.8 million.
Given their immense size and expansive product portfolios, the two channel organizations are seen as predictors for the whole of technology. In after-hours trading, shares of both companies rose, an indication that their results met with favor on Wall Street, at least.
In a prepared statement, Alain Monie, CEO of Ingram summed up 2013 this way: “The fourth quarter marked a strong close to a year where we executed well on our key strategic and financial objectives. We successfully balanced revenue growth with margin and earnings improvement and drove solid operating leverage across the business.”
Speaking on behalf of his company, Thomas Richards, chairman and CEO of CDW, said in a prepared statement that, “2013 was another year of strategic progress and financial performance as the combination of our balanced channel portfolio, broad product suite, and focus on execution enabled us to deliver profitable growth above the U.S. IT market while investing in our future.”
During the fourth quarter, CDW said sales to corporate and education customers grew at a faster pace than those to small and medium-size customers, while sales to federal government accounts declined. Education sales grew more than 20 percent as spending related to Common Core initiatives in the K-12 market gained momentum, and sales of tablet and networking equipment accelerated in the higher-ed sector.
In a conference call with analysts, Richards talked about the investments the company made in 2013 to spur sales. Among other things, CDW added nearly 120 customer-facing employees, most in pre-and post-sales support, and broadened its solutions portfolio in cloud, mobility and security technologies.
For the quarter, hardware sales increased 4 percent, software sales 7 percent and services sales 20 percent. As expected, sales of security, network-management and other software-solutions products outpaced traditional software applications, which remained flat. On a surprising note, the company saw PC sales jump by double digits, fueled by Chromebook sales in K-12, in particular.
As for Ingram Micro, its results were fueled by new OEM mobility agreements in Europe, Asia and Latin America, and by organic growth in Australia. In the fourth quarter, Ingram Micro added global enterprise IT asset disposition, onsite data destruction and e-waste recycling services for large enterprise customers, retail customers and OEMs.
In conjunction with other efforts to rein in costs and improve its responsiveness, Ingram announced that it will launch an internal reorganization designed to achieve three key aims:
The company expects these efforts will produce a onetime savings of $80-$100 million, and annual savings of $80-$100 million each year thereafter.
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January 27 2020 @ 23:00:02 UTC