Tuesday, December 12, 2017
Business

At giant Tech Data Corp., talk turns to last untouched megamarket: Asia

What Tampa Bay company ranks an impressive 109th on the Fortune 500 list of the biggest U.S. corporations — higher than McDonald's or Nike or Capital One — but whose name few folks recognize? • By now it's almost cliche to write how Clearwater technology distributor Tech Data Corp. is so big but so little known here. • Annual revenues hover near $26 billion as the 8,500-employee company successfully competes in three key markets: Europe, North America and Latin America.

If the sum of $26 billion does not resonate, consider this. To generate that kind of revenue, Tech Data must sell $100 million every single work day in customer orders that average less than $1,000 apiece.

Now Tampa Bay's quiet giant is finally talking about pushing into its last untouched megamarket: Asia.

How do we move ahead? Tech Data CEO Bob Dutkowsky answers his own question. "We can do more of what we do by improving our execution. We can diversify the products we distribute. Or we can grow geographically by adding the Asia-Pacific market."

Tech Data's already good at execution. Tech-wise, it distributes everything from HP's high-end servers to printer cartridges, Apple products galore, mobile phones and software and even fast-expanding health care technology.

But it is Asia that stands out as Tech Data's missing link.

"We look at Asia all the time," says Dutkowsky, who once worked for IBM in Tokyo. To gain a foothold on Asia's culture and customers, Tech Data would buy an existing distributor there. Then it would add more companies for economic scale and geographic reach.

It will be gradual. That's exactly how Tech Data blossomed in Europe, buying more than a dozen distributors. Combined, Europe now generates 60 percent of Tech Data's revenues.

Is that a danger given Europe's economic stress? So far, says Dutkowsky, solid IT demand in the northern markets including Germany, Britain, Belgium, Luxembourg, the Netherlands and the Nordic countries make up for the financial woes in Spain, Italy and Portugal.

It's a build-up strategy Dutkowsky, 57 and chief executive since arriving in 2006, envisions for Asia. "We will try Asia when we find the right targets. We will have to do it in steps."

• • •

Why talk of expansion now?

Because Tech Data is riding high and wants to grow. Shares are trading above $50, not far off the all-time high $57.44 closing price hit in February.

In the past five years — amid a major recession — Tech Data has bought back $915 million of its own stock (that strengthens the stock price), bought 14 companies and reduced its debt.

It's that momentum Dutkowsky sees fueling the early talk about Asia.

It's odd, though. Like some other larger Tampa Bay area companies that are good at what they do, Tech Data from time to time gets named by a Wall Street analyst as a possible takeover target.

Anything is possible. Yet Dutkowsky wonders: What buyer is really out there? Tech Data competes against four other successful tech distributors in North America, but none appear big enough to absorb the Clearwater corporation. Other companies like HP, whose products make up more than 20 percent of Tech Data sales, seem unlikely to get back into a product distribution business that, frankly, Tech Data does better.

• • •

I visited with Dutkowsky recently at Tech Data's headquarters, located in a low-key office park just north of the St. Petersburg-Clearwater International Airport. The CEO hosted a morning gathering of the board of the region's Junior Achievement, an organization Dutkowsky has been involved with for 20 years.

With 35 years in technology, Dutkowsky has watched the industry's pace accelerate. That's forced Tech Data to reinvent itself. It no longer focuses on once-mainstream products like disk drives and circuit boards. Now it's big on data center products, mobility products likes phones and tablets; software, consumer electronics and digital signs. Last year, Tech Data sold $1 billion in tablets alone.

Businesses used to set the pace of technology, he says. That meant buying computer systems and software that could deliver competitive services for years. Businesses resisted the hassle and expense of swapping old systems for new ones with only marginal improvements to offer.

Now consumer demand is a bigger driver of technology. That means faster turnover of products. That's good news for Tech Data, which constantly refreshes its inventory for sale with the latest versions of hardware and software.

It's also a big challenge, because company employees must be well versed in all of the latest technologies in order to sell them.

At Tech Data, there is a special room where vendors visit with their new products and train Tech Data workers. Inevitably, the vendors often bring in food as goodwill gestures.

That's why Tech Data employees call it the Fat Room.

• • •

Dutkowsky grew up in Endicott, a rural New York town near Binghamton. Endicott is known as the birthplace of IBM, where Dutkowsky's father worked for many years and where Dutkowsky himself later worked as an assistant to IBM's now-retired CEO, Lou Gerstner.

Endicott residents also endure winters long and hard enough to give Tampa Bay a special place in Dutkowsky's heart.

"It takes outsiders to know how good we have it here," he says.

He admits he's lucky both his grown-up children live in this area. Daughter Jennifer worked at Franklin Templeton before opening her own South Tampa clothing store — Why Not Boutique — in 2008. Dutkowsky's son, Kevin, went to college on a golf scholarship and now runs the Golf Club at Cypress Creek in Ruskin. The Dutkowsky family bought the golf course in 2009 in a sealed bid auction. Both Bob and wife Lorraine are avid golfers.

Having his kids nearby also means the Tech Data CEO gets to see his two grandchildren often.

There's a business reason to mentioning Dutkowsky's grandkids. Call it the Tough Guy story.

As Dutkowsky tells it, one toddler loves to make his grandfather laugh by flexing like a miniature bodybuilder. He does so when Dutkowsky says "tough guy."

Dutkowsky describes Tech Data's culture with the same phrase.

In the early days of IBM, he says, the company had a preference for hiring "angry young men" eager to compete and "fix things that did not work."

Tech Data looks for similar personalities to hire. Someone who shows resilience in competitive business situations. Someone, he adds, who can be a "tough guy."

Someone who can take on the eventual leap into Asia.

Contact Robert Trigaux at [email protected]

 
Comments
Creating PDQ from scratch: CEO of growing brand came from Bucs’ front office

Creating PDQ from scratch: CEO of growing brand came from Bucs’ front office

Shortly after leaving his job as chief financial officer of the Tampa Bay Buccaneers to strike out on his own as an entrepreneur, Nick Reader wondered if he’d made the right move. "I probably had one of the coolest jobs in Tampa," said Reader, 42. Si...
Updated: 13 minutes ago
French group to take over Westfield malls for $15.7 billion

French group to take over Westfield malls for $15.7 billion

Three Tampa Bay malls may soon be under new management. French real estate company Unibail-Rodamco has agreed to buy Australia-based shopping mall operator Westfield Corp. for $15.7 billion in cash and shares."Westfield would arguably be the best or ...
Updated: 1 hour ago
Driven by demand, Planned Parenthood opens second clinic in Tampa

Driven by demand, Planned Parenthood opens second clinic in Tampa

The floor-to-ceiling glass windows are heavily tinted and the inside is hidden behind rows of curtains. Security cameras monitor every corner, and only patients with an appointment and valid identification can pass through the intentionally cramped e...
Updated: 1 hour ago
Tampa Bay’s mortgage delinquency rate crept up in December

Tampa Bay’s mortgage delinquency rate crept up in December

Times Staff WriterThe percentage of Tampa Bay homeowners who are late on their mortgage payments rose slightly in September, probably due to Hurricane Irma. According to CoreLogic, 7 percent of bay area mortgages were delinquent by at least 30 days c...
Updated: 2 hours ago
Hotly anticipated Ichicoro Ane is now open in St. Petersburg

Hotly anticipated Ichicoro Ane is now open in St. Petersburg

Noel Cruz seemed remarkably chill. As did his partner Kerem Koca. All around them in the Station House building in St. Petersburg, workers pounded the last nails, bartenders unpacked boxes of glassware and jewel-toned bottles of Amari, and the kitche...
Updated: 3 hours ago
Record numbers are signing up for Obamacare in Florida as enrollment period draws to a close

Record numbers are signing up for Obamacare in Florida as enrollment period draws to a close

With just four days left to enroll for health insurance on the federal exchange, advocates for the Affordable Care Act say Florida is headed for a record-breaking year. In week five of the six-week open enrollment period, about 823,180 people signed ...
Published: 12/12/17
Kathy Fountain, from anchor chair to therapist’s chair

Kathy Fountain, from anchor chair to therapist’s chair

A knowledgeable voice and familiar face beamed into Tampa Bay homes when Kathy Fountain delivered the 5 o’clock news and chatted with talk show guests on WTVT-Ch. 13. She created some news of her own as co-anchor of the first female team in the Tampa...
Published: 12/12/17
Medical field accounts for 7 of 10 highest-paying jobs

Medical field accounts for 7 of 10 highest-paying jobs

The nation’s highest-paying jobs don’t quite track with the fastest-growing jobs in Florida. According to a new study released today by California-based CareerCast, the highest-paying jobs are largely in the medical field and require post-graduate de...
Published: 12/12/17
To test for climate disasters, like hurricanes: build stuff, then blow it apart

To test for climate disasters, like hurricanes: build stuff, then blow it apart

WEST GLOCESTER, R.I. — In the backwoods of Rhode Island, a team of researchers spends whole days trying to destroy things: setting boxes on fire, shattering chunks of ice, hurling debris through the air at hurricane speed.They work for an insurance c...
Published: 12/12/17
Ruskin artist to help poor kids build bikes reflecting their personalities

Ruskin artist to help poor kids build bikes reflecting their personalities

RUSKIN — Art meets transportation for a good cause in an after-school program where two dozen kids will create bicycles guaranteed to turn heads. The vision comes from Ruskin artist Michael Parker, who calls his prototype machine a "rat bike" ...
Published: 12/12/17