Power Systems Distributor Ingram Micro Goes Public (Again)

November 11, 2024 Timothy Prickett Morgan

We admit it. It has been a long, long time since we paid much attention to the master distributors that IBM and other IT equipment makers use as a channel between themselves and their systems customers. We used to follow Arrow Electronics and Avnet like a hawk. But we got sidetracked and stopped thinking about them, in part because the late and great Dan Burger used to be our go-to guy for keeping in touch with the Power Systems channel distributors.

The recent initial public offering of Ingram Micro, which is really the second time the company has gone public so technically speaking it cannot be an IPO, has given us a reason to start thinking about the distribution channel that many of our friends in the IBM i business are connected to.

Avnet sold off its systems distribution business to Tech Data in 2016, and Arrow Enterprise Computing Solutions (ECS) is still in the game. Ingram Micro is a relative newcomer to the Power Systems distribution business, but in 2013 IBM brought in Tech Data and Ingram Micro alongside Arrow and Avnet to try to double its channel coverage and help boost sales of its System x and Power Systems iron and related storage and systems software. Three years later, Avnet had had enough of the datacenter, and sold its enterprise systems business to Tech Data, leaving the three master resellers that now serve as a conduit between IBM and most of its customers. (Well, really, customers interact with thousands of business partners that are downstream from Avnet, Tech Data, and Ingram Micro.)

Ingram Micro sells the full suite of Power Systems stuff, and we have no idea how much of its revenues come from the IBM i, AIX, and Linux on Power machinery. And, given that Ingram Micro is now public again and that there are rules against selective disclosure enforced by the US Securities and Exchange Commission, we don’t know just how much of a feel we can get about Ingram Micro or its peers, Tech Data and Avnet. But we are going to start keeping track of what is happening with the distributors again, starting now.

Ingram Micro was founded on 1979 in Irvine, California by a husband and wife team of teachers named Geza Czige and Lorraine Mecca, who got into the PC distribution business back then and made $3.5 million in their first year of sales. A decade later Ingram Industries merged with Micro D, as the original company was called, to create Ingram Micro D, and in 1996 Ingram Micro had grown to a $12 billion electronics and systems distributor and was listed on the New York Stock Exchange.

Two decades later, HNA Group, a Chinese conglomerate with a focus on airlines, transport, and hotels took Ingram Micro private for $6 billion, and the idea was this would give Ingram Micro entrée into the fast-growing Chinese market. In the wake of the trade war with China that started during the first Trump administration and Chinese focus on indigenous investment, HNA Group was compelled to sell off Ingram Micro to Platinum Equity, a private equity firm founded in 1995 in Beverley Hills that, among other things, owned chunks of businesses acquired from Pilot Software, Williams Communications, Fujitsu, Alcatel, and Motorola when it started out and owns the Detroit Pistons professional basketball team. Platinum Equity has over $48 billion in assets under management and has bought over 450 companies since it was founded nearly three decades ago.

In the second IPO, Ingram Micro and Platinum Equity sold a combined 18.6 million shares to Wall Street and raised $409 million for the owners and the company’s coffers. Ingram Micro is using the funds to pay down some of its debts. Platinum Equity will control 90 percent of the shares after the float to Wall Street, and the company now has a market capitalization of $5.67 billion as we go to press.

There is not a lot of historical information on Ingram Micro, but the company said in filings with the SEC that it expected revenues of around $12 billion in the third quarter ended in September, up a smidgen from a year ago, with net income of between $73 million and $77 million, down a bit from the $87 million reported in the year ago quarter.

When we get real numbers, we will start building our models for Ingram Micro, and we will also get on with it with Arrow and Tech Data, which merged with Synnex in 2021 to create TD Synnex, which is bigger than Ingram Micro in the electronics and IT distribution business.

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