Tech Data sees profits slide in third quarter
But turnover is still on the up in latest financials
Distribution giant Tech Data has expanded its share repurchase scheme following its $14.8m third quarter profit drop.
For the three months ended 31 October 2006, Tech Data, parent company of Computer 2000 in the UK, generated profit of $22.9m and sales of $5.1bn compared to profit of $37.8m and turnover of $4.7bn in the same quarter last year. It also incurred $8m of combined restructuring and consulting costs related to its EMEA restructuring programme (CRN, 26 August).
Steve Raymund, chief executive of Tech Data, said in a statement: “Our focused restructuring efforts in EMEA are delivering measurable operating improvements as demonstrated by our third-quarter results. While we are pleased with the improvements we’ve made in our business, there is still more work to be done.”
Tech Data’s board of directors have since announced an expansion of its existing share repurchase scheme under which the distributor is authorised to repurchase a total of $200m worth of common stock.
During Q3 the distributor already purchased 1.5m shares of common stock at a total cost of $54.8m.
Jeffery Howells, chief financial officer of Tech Data, said: “Combined with the company’s EMEA restructuring programme efforts, our share repurchase programme provides a solid platform for increased shareholder value over the long term.”
Paddy Lawton, managing director of ISV Digital Union, said: “An EMEA restructure needs to be done only once and achieve the aims it originally set out to. It can’t be done twice.
“Distribution is a very cut-throat market at the moment and the market is seeing lots of resellers chopping and changing between distributors to get the best margins,” he said.