Rich Hume has run Tech Data since June and his first earnings report as CEO came out Thursday.
Profits were up, but missed expectations. In less than two hours, the companyís share price plunged 17 percent.
Welcome to the top job.
Hume took it in stride.
"Itís an opportunity moving forward to go get it back," he said.
Hume, 59, came to Tech Data 2Ĺ years ago, after 30 years at IBM. Three months ago, he succeeded longtime CEO Bob Dutkowski, who moved to a new role as executive chairman of the board.
The Clearwater-based IT wholesaler, the areaís largest company by revenues, is a middleman of sorts, buying equipment from major suppliers including Apple, HP and Cisco and shipping it to customers through logistics centers worldwide, six of them in the continental United States.
Hume and I spoke Thursday afternoon. Hereís some of what one of the areaís newest CEOs had to say during the 30-minute interview, edited for length and clarity.
So what happened with the stock price?
Far be it from me to predict what is going to happen in the market. I think I would have anticipated it dropping, perhaps not as much as it has. ... We have to make the right set of adjustments as we move forward to get back to where we were.
What will those adjustment look like?
If you think about our current quarter, growth was not our problem. We obviously had really strong growth. The real trick, or the fine tuning, is growth in the more profitable areas.
You are rolling out a Global Business Optimization Program to streamline Tech Dataís workflow. How will that help with the fine tuning?
First, the intention is to create savings so that we can reinvest them in our business. We are looking to save $70 (milllion) to $80 million per year and taking half of those funds and reinvesting them back into the business in new areas that have better growth and financial attributes. Think about the areas of cloud computing, security, analytics and services.
The second piece is ó to provide a fair return to our shareholders ó we need to have some cost savings to offset the recent erosion in (profit) margins throughout the industry. To do that, we will allow approximately 50 percent of those savings to drop to the bottom line.
Will that streamlining lead to job losses?
There will be some portion of the savings that will be due to a reduced labor force. We have 14,500 employees globally of which approximately 2,000 are here in Clearwater. So we would expect there to be some local impact, but it wonít be significant or substantial.
How much does the general economy affect your business compared to whatís happening within the IT industry?
I see the economy as the foundation. To give the extreme example, go back in time to 2008 after the market crashed when the economy slowed. The IT industry was not (immune). It saw its decline occur consistent with other categories.
That being said, there are also ebbs and flows within the IT world that can slow down demand. But generally the category is so big that if something gets long in the tooth or late in its life, there is something else that is emerging that provides an opportunity.
Tech Data benefits from the breadth and depth of our portfolio. When one category is down, itís very likely that something else is going to be up.
Any surprises since you took over as CEO in June?
I know that this answer is boring, but not really.
Iíve been here for 2Ĺ years. Iím sure if I had walked through the door as a brand new employee and had taken the CEO role, I would say that there were some things that surprised me.
Whatís your leadership style?
First, Iím a very collaborative leader. I like to involve the whole of the organization. Iím not a hierarchical type of guy.
Second, throughout my entire 35-plus year career I have aligned with the servant-leader style. Iím more about what I can do for the 14,500 people of Tech Data as opposed to what they can do for me. Itís my strong desire to put them in a position through training and skills development and career development to help them prosper and be effective and successful.
In this strong economy, with very low unemployment, are you having any trouble attracting or retaining talent?
I would say that generally you are always very focused on recruiting and retaining talent. And I would say that we are pretty comfortable with where we are at.
There are some really hot areas, like security, cloud, and big data, where the demand for those skills and the compensation for those skills are a little bit different. So there are pockets I think that not only Tech Data but the entire industry is challenged with in relation to recruiting and hiring.
Is there anything our education system could be doing differently to help?
Data analyst is becoming a very hot position, very in demand. With all the data being created having the skill and acumen to prioritize what data is important and getting to the data to take an action whether it be to improve marketing programs to drive sales or whether it be to drive efficiencies within the business.
President Donald Trump recently suggested that requiring earnings reports twice a year instead of every quarter would help companies focus more on the long term. What do you think of that idea?
I think that there should be a level of accountability to publicly and transparently report how a company is performing. The frequency of that reporting, whether it be annual, semi annual or quarterly, I havenít given a lot of thought to.
How often are you talking with former Tech Data CEO Bob Dutkowski?
Multiple times a week. Iím blessed to have Bob as a mentor as I come into this role. Iím blessed to have him as a historian. And Iím blessed to have him as a very experienced business person. So I use his brain in all three of those dimensions. Heís been very helpful to me.
Will Tech Data be your last stop?
Tech Data is certainly where all my energies are focused. Iím not thinking beyond Tech Data. If there is a time in the future that myself or others believe that I should think otherwise, I will do so. But right now there is no need for me to think about that.
Contact Graham Brink at [email protected] Follow @GrahamBrink.