Tech Data Suggests Tech Is Well But Dollar Strength Hurts (CSCO, TECD)

"Slash" submits: Tech Data (ticker: TECD) reported this morning with results ahead of expectations and above the high-end of management guidance. Both Americas and EMEA were strong sequentially. Gross margin was little weaker due to product mix, where product was sold and internal issues. Guidance for the January quarter is for growth of 4-7% sequentially and 5%-8% Y/Y, which is on top of the US Dollar appreciating about 10% from last year. This could help us understand little bit why CSCO was cautious on EMEA in January guidance.

If EMEA is better than expected given the rise in USD then its all upside for tech. Overall, TECD makes me comfortable that most of tech out there is doing well and end market demand is steady -- at least from corporations and small businesses.

I am sticking with the call I made on Oct 18th to get bullish on tech, even though the Nasdaq is up 9.6% from that day. There's one caveat though: that Thanksgiving must be as good as we expect it to be. Doing some preliminary work on expectations, it looks as though tech estimates look reasonable for both December and March 2006.

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