Tech Data Gains Despite Warning

Tech Data (Nasdaq: TECD) was up US$1.50 at $27.81 in morning trading Thursday, even after the Clearwater, Florida provider of information technology (IT) products and services said that the widespread slowdown in IT spending will hurt results for the next quarter.

Tech Data also reported results for the fourth quarter ended January 31st that topped analyst expectations. Net income for the quarter rose to $52.7 million, or 92 cents per share, from $37.1 million, or 67 cents, in the same period a year earlier. Sales increased to $5.3 billion from $4.8 billion.

Chairman and chief executive officer Steven A. Raymund was optimistic about the company’s prospects, saying that the results “clearly demonstrate Tech Data’s superior earnings power.”

Added Raymund: “This record-breaking performance underscores that we have the right business model and strategic direction for long-term success. Tech Data is clearly the best performer in its industry, and we are poised to strengthen this leadership position.”

Tech Data said it expects net income for the first quarter ending April 30th to fall to $24 million to $29 million, or 45 to 53 cents per share, from $37.2 million, or 68 cents, in the year-earlier quarter. Sales will likely total $4.6 billion to $4.8 billion, the company said.

“While this slowdown presents difficult challenges for us and the entire IT industry, it also gives our customers and vendors more reasons to strengthen their relationships with Tech Data,” Raymund said. “Many major vendors are reducing their workforces and seeking ways to move from a fixed to a more variable cost structure.”

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