Tech Data Posts Solid Earnings Beat on Strong International Sales

Shares of number-two computer product distributor Tech Data jumped over 9% in pre-market trading after the company said it swung to a Q2 net profit of $7.2 million ($0.13/share), having lost $155.5 million ($2.81/share) a year ago. Net of charges, EPS of $0.50 ($27.5 million), up from $300,000 ($0.01/share), were well ahead of Street estimates. Revenue climbed 14% to $5.61 billion from $4.94 billion. On average, analysts were looking for EPS of $0.30 cents on revenue of $5.3 billion. For Q3, the company expects revenue of $5.75 billion to $5.9 billion; analysts had been forecasting $5.67 billion. Its strong growth, the company said, was fueled by international sales, particularly in the Americas. "We delivered a significant year-over-year turnaround in our operating results in the European region... Tech Data is in a solid position to further leverage our strength in execution to improve our performance in the second half of this fiscal year," CEO Robert M. Dutkowsky said. In a pre-earnings note, Morningstar said "Tech Data's operations have been punished by a slow recovery in IT demand, but management's actions give us reason to watch this story play out. Because of tremendous economies of scale, Tech Data has a considerable competitive advantage over smaller rivals, and slim industry margins deter potential market entrants. As IT demand continues to remain healthy, Tech Data should see returns improve, as long as management can get its house in order."

Sources: Press release, MarketWatch, Reuters
Commentary: Tech Data Offering Macs Preloaded With Windows
Stocks/ETFs to watch: TECD. Competitors: IM, SNX. ETFs: JKL

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