Avnet sees stabilisation at enterprise arm

Technology Solutions group puts in solid performance despite plunge in overall sales and profits

Vallee: Technology Solutions met our expectations

Avnet’s third quarter results offered a ray of hope for the channel as the distributor alluded to stabilisation at its Technology Solutions arm.

The New York-listed mammoth registered a steep drop in revenues and profits for the three months to 28 March and announced it is initiating another $25m (£17m) of cost reductions.

Total revenues fell 16.3 per cent year-on-year to $3.7bn while net profits plunged to $18m from $107.2m a year earlier.

Avnet operates under the banners of Electronics Marketing and Technology Solutions, the latter of which focuses on enterprise hardware and software and saw sales fall by a less dramatic 10.8 per cent to $1.6bn.

Chief executive Roy Vallee said Technology Solutions had showed signs of stability during the quarter.

“Technology Solutions met our expectations for both revenue and operating income as business spending in the markets we serve, while still tepid, appears to have stabilised over the past two quarters,” he said.

But Vallee said the distributor would “react appropriately” to align its cost base with market realities. The $25m in annualised expense reductions comes on top of the $200m cost reductions already announced.

“There are still many questions on the macro economy, but the unprecedented speed with which the technology supply chain reacted to the global demand slowdown suggests that we are getting closer to the bottom of this cycle,” Vallee said.