The leadership team at Ingram Micro Inc. (NYSE: IM) rang the opening bell to commence trading at the New York Stock Exchange this week to celebrate the 15th anniversary of Ingram as a public company.
Ingram also answered the bell in terms of revealing its financial figures and goals.
Company CEO Greg Spierkel said the distributor’s strategy is designed to drive competitive advantage, sustainable profitable growth and return on invested capital through the right combination of operational improvements and expansion initiatives.
Spierkel listed the following operational and financial goals expected to be achieved by 2015:
1. Completing the implementation of its new enterprise resource planning system, with investments in the initiative peaking in 2011. Once fully implemented, the new system will provide a consistent global platform for best-practice and process sharing, real-time data for quicker decision-making, improved customer service and greater automation and efficiencies.
2. Increasing revenues in line with overall technology spending, which is expected to grow at a compound annual growth rate of 4.5 per cent to 6.5 per cent through 2015.
3. Achieving a full-year gross margin of 5.4 per cent to 5.6 per cent.
4. Growing operating income faster than the rate of sales, delivering a full-year operating margin ranging from 155 to 175 basis points.
5. Generating earnings per share of $2.60 to $3.10.
6. Consistently driving return on invested capital to 300 to 500 basis points above weighted average cost of capital., and
7. Strategically deploying capital for internal investments and acquisitions while returning capital to shareholders.
For the first time, the company disclosed revenue levels and growth targets for its specialty areas. They are:
1. Advanced (Enterprise) Computing – Sales of more than $10 billion in 2011, reaching more than $14 billion in 2015. This area includes products currently reflected in the traditional distribution business, such as enterprise storage and software, servers and networking.
2. Data Capture / Point of Sale – 2011 revenues are expected to surpass $600 million, growing to $900 million for the full-year 2015.
3. Mobility Products and Services – Revenues of more than $600 million in 2011, growing to $1.7 billion in 2015.
4. Ingram Micro Logistics – Expected 2011 fee volume (reflected as gross profit on the income statement) of more than $120 million, surpassing $190 million for the full-year 2015, and
5. Cloud Computing – Launched earlier this year, 2015 revenues are expected to surpass $200 million by 2015.
If you remember the 3Par story from last year, you’ll be interested in this little bit of news from Ingram.The distributor announced that the Buffalo Solution Center will host demonstrations of the new HP 3PAR F200 Storage System. The new hands-on and virtual display solution was introduced to help channel partners capitalize on the fast-growing storage market that supports enterprise-class public and private cloud computing solutions.
To accelerate sales, Ingram Micro also announced that for a limited time the distributor’s HP Enterprise Storage channel partners in the U.S. are also eligible to receive HP Enterprise Authentication training and certification at no cost. Let’s hope this promotion finds its way to Canada soon.
In addition, Ingram Micro and HP will help qualifying resellers cover the expense of bringing customers and prospects into the Buffalo Solution Center for a hands-on demonstration of the business and technical advantages of HP 3PAR Utility Storage. Both complimentary offers are available through the end of January 2012.
I attended the Synnex VARnex conference in Las Vegas this week and Synnex (NYSE:SNX) made a significant distribution agreement with Aruba Networks Inc. (NASDAQ:ARUN), an access networking solutions for mobile enterprises vendor.
Through Syynnex’s’ Technology Solutions Division program, ConvergeSolv Secure Networks, the company has expanded its existing offering of tier-one wireless networking solutions to the channel for both the small-to-medium enterprise (SME) and the small-to-medium business (SMB) markets. Peter Larocque, president of U.S. distribution for Synnex, said Aruba Networks’ approach to the mobile network, as well as its solid reputation as a leader in the industry, gives Synnex the confidence to offer its solutions to SME resellers.
Westcon tries to get physical
Westcon Group has agreed to acquire Sentronics, a South African value-added distributor of electronic video and security equipment and solutions.
This looks to be a big deal on the surface and may even be an astute strategic move on Westcon’s part.
But the seven-year old Sentronics is just a 25-person operation. I’m not saying this is an awful company to buy, but if Westcon wanted to acquire a small physical security distributor the Tarrytown, N.Y.-based distributor should have looked in their own country to PolarisUSA Video, Inc., a Norcross, Ga.-based distributor of security/surveillance and communication equipment since 1983.
I realize the market for physical security is big one in South Africa because of an uprising of criminal gangs, but the U.S. market is at least on par.
According to Frost & Sullivan, the market for global closed-circuit television surveillance, which is the hub of any physical security solution, is projected to reach US$ 19 billion by the end of 2013 at a compound annual growth rate of 21 per cent. This is great growth rate.
I don’t have a breakdown of individual countries but at a regional level Asia, Europe and the Americas account for about 34 per cent each of the total market.
Westcon is following Ingram’s lead in becoming a distributor of physical security products.
Jacques Malherbe, CEO of Westcon SA, said the company is deeply committed to growing a local footprint by offering customers solutions that meet global standards, align with local business requirements, and are relevant to clients, partners and resellers. Sentronics fits perfectly within this strategy, and the inclusion of its knowledge base and solution set will significantly bolster our presence as a value added distributor of video and security solutions and services.
Avnet reaches the Pinnacle
In a deal that makes a little more sense, Avnet has agreed to purchase Pinnacle Data Systems Inc. in a $22 million all-cash deal the distributor is calling a merger.
Pinnacle, not to be mistaken for the golf ball manufacturer, is a provider of application specific hardware and global support solutions for the large OEMs. Sure, this is a niche business, but if you look at the big picture with all these app marketplaces cropping up, having application specific hardware will become an important differentiator in the future.
Pinnacle will become part of Avnet Integrated Resources, which provides reverse logistics and after-market services to the global technology industry.
Steve Church, president, Avnet Integrated Resources, said this acquisition builds on its commitment to expand into adjacent businesses and puts in place a third and critical element in its new after-market services business to benefit industrial customers, consumers and the environment.
What makes this a smarter acquisition than the Westcon buy is that Pinnacle is based in Ohio with offices in Singapore and the Netherlands.
Avnet also signed a U.K. distribution deal with Silicon Valley hot-shot Palo Alto Networks. Avnet will now distribute Palo Alto Networks’ entire product family of next-generation firewalls.