Tech Data 1Q16 Earnings Call Notes

Tech Data (TECD) Bob Dutkowsky on Q1 2017 Results

The iPhone was down but everything else was up

“And Matt, let me give you just a little bit more color on Apple in the quarter; the iPhone, as you well know, was down, but every other Apple category for us was up in the quarter. iPads, desktop, beats [ph], accessories, notebooks, the whole product line was up in every category. So Apple is not just iPhones for us, I think that’s an important distinction.”

Opportunities when vendors bring more products into the channel

“I think the important other pocket of market share gain that’s available, is when a vendor brings more products into the channel. So for example, as well documented recently, Dell has moved more of its product from direct sales into the channel, and that is pure market share opportunity, that some distributor is going to win. And we believe in the last few quarters, we have done very-very well, winning those jump balls, where vendors bring more product to the channel.”

Clearly European data center slowed

” We have had a really good run in the data center, in both geographies, both in the Americas and in Europe, and clearly, the European data center slowed down in the quarter. From our perspective, I don’t necessarily have much value to add, other than, if you read all the reports from all of our vendor partners, and their prints for the quarter, you can see that there is a pretty consistent message that performances were down in all of the broad category, short of networking. And we had good networking performance across our footprint.”

Transitions happening in the data center from spinning disk to solid state storage

“I think that the transitions that are happening in the data center, for example from spinning disks to solid state storage and flash, those are transitions that don’t happen overnight, they evolve, and that’s a broad array of vendors that are bringing those products to the market, and we are fairly well positioned. The market share leaders in those, for example in flash and solid state are companies like HP, EMC, IBM and we have access to all of those products.”

IT spending environment is muted

“And by geography and by segment and by technology, our view is, all of that feels muted right now, compared to the last few quarters. So it’s important to note, that Tech Data can still deliver good results, even in that muted market environment, because of our ability to optimize our coverage and the customers that we sell to. So muted is not necessarily a bad thing, it’s just the reality that we don’t see the strong growth that has existed in the IT spending environment, like it has been, say over the last four or five quarters. And again, we are one datapoint for you, but look at the performance of our vendor partners and their outlooks as well, and you will hear the same tone everywhere.”

Chuck Dannewitz

Solid sales growth in most product categories

“At a product level, the Americas growth was driven by solid sales growth in most product categories, including desktops, notebooks and new form factor tablet, PCs. Mobility, consumer electronics, networking and security products also delivered solid growth in the quarter.”