CLEARWATER — Coming off a major acquisition early this year, technology distributor Tech Data Corp. on Thursday reported weaker-than-expected quarterly earnings. The loss of momentum following the well received $2.6 billion purchase of Avnet's Technology Solutions division sent Tech Data shares plummeting in after-hours trading.
Net income for the fiscal second-quarter net income ending July 31 totaled $47.5 million. Net income per share was of $1.24, down 5 percent from the same period last year. Earnings adjusted for one-time gains and costs were $1.74 per share, up 23 percent.
The results delivered by Tampa Bay's largest public company by revenues missed Wall Street expectations.
By 5:30 p.m., 90 minutes after public trading ends, Tech Data shares had fallen sharply by more than 19 percent. In a conference call remarks to analysts, Tech Data CEO Bob Dutkowsky said worldwide sales of $8.9 billion exceeded the company's plans, but "we did not deliver the earnings we expected."
Dutkowsky attributed the weaker bottom line results to execution challenges and a more competitive market, especially in Europe. Gross margins were squeezed by bigger sales of thinly priced PCs and printers to large customers in North America and variability in sales of data center products, he said. Some vendor products underperformed, making it harder for Tech Data to be eligible for anticipated sales rebates.
The CEO stressed that any execution flaws had been addressed. He assured analysts the ongoing merger of Technology Solutions into Tech Data was going well.
"We know how to operate in such a dynamic marketplace," Dutkowsky said.
Contact Robert Trigaux at [email protected]