Tech Data Corporation (TECD) will be offering 3D TVs and Lenovo’s IdeaPad laptop PCs to retailers in the consumer electronics market, thereby expanding its consumer electronics product offering and diversifying its customer base.
The consumer market had been sluggish in 2009; however, we believe the increasing popularity of 3D TVs will drive a higher demand for consumer electronics, thereby boosting Tech Data’s profitability over the long term.
Tech Data offers authorized retailers access to 40 to 60-inch 3D LCD TVs, 3D glasses and Blu-ray Disc players. Tech Data also distributes a broad array of 3D-capable projectors. According to U.S. research firm Display search, 3D TVs is expected to ship 3.4 million units in 2010 with 42.9 million projected to ship in 2014. The expanded product portfolio with the addition of 3D TVs will enable Tech Data to benefit from the soaring demand of 3D products.
Furthermore, Lenovo’s IdeaPad laptops will help the company take advantage of the tremendous growth in personal computers (PC) market. According to market research firm IDC, the PC market is expected to grow 20% in 2010 and portable PCs will remain the driver of growth across consumer and commercial segments.
Tech Data has a diversified customer base within both the North American and European operating segments. In 2009, Tech Data added more than 1,300 consumer electronics retailers’ worldwide and benefited from strategic retail distribution agreements with leading electronics manufacturers.
Tech Data has a diversified customer base within both the North American and European operating segments. In 2009, Tech Data added more than 1,300 consumer electronics retailers’ worldwide and benefited from strategic retail distribution agreements with leading electronics manufacturers.
The company’s diverse product portfolio through its Consumer Technology Group will help it to further strengthen its customer base and leverage strategic partnerships with leading hardware and software vendors. This is a key growth driver for the company over the long term.
Maintain Neutral
With strong earnings momentum, continued cost-cutting initiatives, a diversified customer base, significant operating efficiency, share repurchases and strong fundamentals, we remain positive on the company’s long-term growth.
Moreover, the rise in profitability could be driven by a stronger demand for technology products; however, the drag in worldwide IT spending could impact sales near term. Therefore, a slower-than-expected recovery in IT spending may hurt Tech Data’s business.
Tech Data will be reporting second quarter 2011 results on August 19, before the market opens.
Tech Data is one of the leading providers of information technology (IT) products, logistics management and other value-added services. The company is the second largest distributor of IT products worldwide and covers 75% of the total market. It has more than 125,000 customers in over 100 countries.
The company offers microcomputer hardware and software products to value added resellers (50%), direct marketers and retailers (30%) and corporate resellers (20%). Tech Data distributes consumer electronic products from leading hardware and software vendors such as Apple Inc. (AAPL), Panasonic Corp. (PC), Hewlett Packard Company (HPQ), Adobe Inc. (ADBE), Autodesk Inc. (ADSK) and Cisco Systems (CSCO) among others.
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