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Post-merger Tech Data stock cracks $100 mark for first time after big sales surge in quarter

CEO Bob Dutkowsky says there is still much work to do.
CEO Bob Dutkowsky says there is still much work to do.
Published Jun. 2, 2017

CLEARWATER — Fueled by its biggest acquisition earlier this year, technology distributor Tech Data Corp. on Thursday reported a 29 percent leap in fiscal first-quarter sales to $7.7 billion, triggering a jump to a record stock price.

Net income in the quarter slipped 8 percent to $30.7 million, reflecting higher costs associated with that acquisition, a $2.6 billion deal for Technology Solutions, a unit of Phoenix-based Avnet.

Within the first half hour of trading Thursday morning, Tech Data shares soared to more than $100 for the first time in its history. Shares closed at $103.07, up 6.3 percent. The stock has risen from $85.12 since the start of 2017.

Tech Data CEO Bob Dutkowsky, in remarks to analysts and an interview with the Tampa Bay Times, praised the performance of the company, Tampa Bay's largest public corporation by revenues. He marveled at Tech Data shares now hitting triple digits, a sharp increase from Dutkowsky's arrival at the company 11 years ago when Tech Data traded in the $20s.

"Tech Data delivered these strong results," he said of the first-quarter numbers, "while at the same time making excellent progress on integrating Technology Solutions — the largest and most transformative acquisition in our company's history."

The strong quarterly performance will allow Tech Data to start paying down debt associated with its deal. Dutkowsky also cited the success so far of retaining the top talent at Technology Solutions. Some of its managers have stepped into top positions in the newly merged business.

As an example, Dutkowsky pointed to the naming of Patrick Zammit in February as Tech Data's new president of its business in Europe — the company's largest market. Before the merger, Zammit was global president of Technology Solutions. In his new role after the merger, Zammit now manages an even larger business for the combined company.

The merger broadens Tech Data's scope of products and geographically expands the company into Asia for the first time. In fact, this quarter's numbers are the first as a combined company and include $4.3 million in operating income from Asia operations, all stemming from Technology Solutions' presence there.

Dutkowsky cautioned against "dancing in the aisles" over the strong financial quarter because the merging companies are still on the front end of a rigorous integration. "We can see the promise of it," he said, "and the performance today shows the beginning of that promise. But there is so much work left to do."

Tech Data is halfway through a 180-day window since the acquisition that allows the company to use the Avnet Technology Solutions name. Dutkowsky's team will roll out a new branding effort this summer to bring the acquired company under the Tech Data marketing umbrella.

To generate more than $7 billion in sales in a single quarter, Dutkowsky said, every business day Tech Data must sell close to $120 million of tech products, from laptops and software to cellphones to networking equipment.

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"The new Tech Data wakes up in the morning thinking about customers and vendors and creating value in the marketplace," Dutkowsky said. "Both companies have that deep in their DNA."

Contact Robert Trigaux at Follow @venturetampabay.


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