• The Four Hundred
  • Subscribe
  • Media Kit
  • Contributors
  • About Us
  • Contact
Menu
  • The Four Hundred
  • Subscribe
  • Media Kit
  • Contributors
  • About Us
  • Contact
  • Storage, Software, And Services Drive Up Arrow’s Systems Biz In Q4

    February 11, 2013 Timothy Prickett Morgan

    The Enterprise Computing Solutions group of master distributor Arrow Electronics ended the fourth quarter on a high, with business being brisk enough to almost make up for decline in the component business that is the other engine of Arrow and its main competitor in the distribution racket, Avnet.

    In the quarter ended in December, overall sales at Arrow fell by just under 1 point to $5.4 billion, and if you look at it in local currencies, sales were actually off 3 percent. So the weakening dollar helped the numbers a bit. Sales at the ECS group rose by 11 percent to $2.22 billion, while revenues at the Global Components group fell 7 percent to $3.19 billion. Operating income at the company was up 13.8 percent to $264.2 million, which means the company is running pretty well, but Arrow booked a charge of $79.2 million in the quarter for the “settlement of legal matters” (I do not know what for, and the commentary provided by Arrow did not explain it.) These charges helped push net income down 16 percent to $132.4 million.

    In a conference call with Wall Street analysts, Arrow’s top brass didn’t say much about how the server business was doing, but they did say that the double-digit growth in storage, in software, and in services helped bolster sales in what I presume was a tough market to try to sell Power Systems machines, given the impending upgrades to Power7+ processors and a slight softening in the X86 market. The good news for Arrow is that it is less dependent on “proprietary servers” for its profits. That is also the bad news if you want the Arrow channel to be motivated and actually push Power Systems iron through its channel and into customer accounts.

    “If you go back to a few years ago, proprietary servers [generated] the vast majority of our profits,” explained Michael Long, president and CEO at Arrow. “And today, with most of the services that we are offering along with the software, we’re able to provide a bigger solution to what the customer requirements are. And I would say that storage has largely replaced and exceeded what proprietary servers did before.”

    Arrow likes software in particular because there’s no inventory to stock and the margins are high on new software license sales. Margins in storage and networking products are strong as well. The ECS unit overall had operating income of $114.2 million, up 7.4 percent, while the components biz only had an operating income of $123 million, falling 30.4 percent.

    For the full year, ECS had just over $7 billion in sales (up 7.8 percent) with an operating income of $291 million (up 10.7 percent). Arrow overall had $20.4 billion in revenues, off 4.6 percent, with a net income of $506.3 million, falling 15.5 percent.

    Looking ahead, Arrow says to expect for total sales for the first quarter of 2013 ending in March to be in the range of $4.6 billion and $5 billion, with ECS generating $1.55 billion to $1.75 billion in growth and earnings per share for the whole company to be in the range of 80 cents to 92 cents. Arrow had $4.89 billion in sales in the first quarter of 2012, with $1.54 billion in ECS revenues and earnings per share of $1.00 flat. So the story for 2013 looks like this: rising enterprise product sales, flat to down components sales, and margin pressure due to components.



                         Post this story to del.icio.us
                   Post this story to Digg
        Post this story to Slashdot

    Share this:

    • Reddit
    • Facebook
    • LinkedIn
    • Twitter
    • Email

    Tags:

    Sponsored by
    RPG & DB2 Summit

    Summit Hands-On Live! Workshop Series
    April 27 – May 20, 2021

    In-Person, Interactive, In-Depth — Online!

    Master critical IBM i development skills at record speed with the Summit’s full-day Hands-On Live! workshops.

    Teaching live online via video meeting, instructors Paul Tuohy, Jon Paris, Susan Gantner, and Mike Pavlak take you deep into the best ways to use your favorite technologies, cementing your knowledge with guided, hands-on labs and personal attention.

    Choose from 7 different workshops to hone your skills.

    • SQL Procedures, Functions & Triggers
    • Intermediate SQL for RPG Developers
    • RPG Procedures & Service Programs
    • Building Modern RPG Applications (2-day workshop!)
    • RDi Quick Start
    • RDi Beyond the Basics
    • Python for RPGers

    Check out the workshop abstracts and prepare to take your productivity to new heights!

    Share this:

    • Reddit
    • Facebook
    • LinkedIn
    • Twitter
    • Email

    Liaison Widens Partner Role in Selling Cloud Integration Zend Adds Mobile, Problem-Resolution Features to PHP Stack

    Leave a Reply Cancel reply

Volume 23, Number 6 -- February 11, 2013
THIS ISSUE SPONSORED BY:

Help/Systems
New Generation Software
Townsend Security
United Computer Group, Inc.
RJS Software Systems

Table of Contents

  • Invader II: New Power7+ Machines Take On Entry X86 Iron
  • IBM Beefs Up The Power7+ Midrange With Double-Whammy Sockets
  • TR6 Brings Assorted Tech Goodies To IBM i
  • As I See It: The Next Big (Destructive) Thing
  • Recognition Of IBM i Begins With Teamwork
  • IBM Puts On A Very Slick Power7+ Web Event
  • Storage, Software, And Services Drive Up Arrow’s Systems Biz In Q4
  • Jack Henry’s Fiscal Winning Streak Continues
  • Wisconsin Tech Conference A Smart Move
  • January Sees North America IT Jobs Explosion

Content archive

  • The Four Hundred
  • Four Hundred Stuff
  • Four Hundred Guru

Recent Posts

  • Why Open Source Is Critical for Digital Transformation
  • mrc Refreshes IBM i Low-Code Dev Tool
  • Unit Testing Automation Hits Shift Left Instead of Ctrl-Alt-Delete Cash
  • Four Hundred Monitor, March 3
  • IBM i PTF Guide, Volume 23, Number 9
  • Doing The Texas Two Step From Power9 To Power10
  • PHP’s Legacy Problem
  • Guru: For IBM i Newcomers, An Access Client Solutions Primer
  • IBM i 7.1 Extended Out To 2024 And Up To The IBM Cloud
  • Some Practical Advice On That HMC-Power9 Impedance Mismatch

Subscribe

To get news from IT Jungle sent to your inbox every week, subscribe to our newsletter.

Pages

  • About Us
  • Contact
  • Contributors
  • Four Hundred Monitor
  • IBM i PTF Guide
  • Media Kit
  • Subscribe

Search

Copyright © 2021 IT Jungle

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.