Distributor Group Says Recession Close to Bottom

By Jessica Davis  |  Print this article Print

Distributor trade organization Global Technology Distribution Council says that while we aren't even close to uncorking the celebratory end-of-recession champagne, sales declines in the IT industry are slowing. That backs up similar statements recently from Intel and Avnet, but is more optimistic than what Microsoft and AMD have said.

Intel has said the PC market has hit bottom, and analysts and at least one distributor seem to agree, even if some significantnaysayers remain.

But adding to the it’s-not-getting-any-worse camp, this week the Global Technology Distribution Council, a consortium of IT distributors, says that the sales declines that the industry have experienced are slowing down month over month sequentially.

The GTDC, whose members include Ingram Micro, Tech Data, Avnet, Arrow and D&H Distributing, collects sales data from each of its members every month and has seen the declines slow since the worst month—January.

"The phrasing I’ve been using is that things are increasingly less worse," says Tim Curran, CEO of the GTDC.  "It’s still pretty bad, but less bad."

Curran says that sales in the United States dropped 21 percent in January year over year. In February sales were down 19 percent. And in March they fell 18 percent. (April numbers are not yet available.) The decline is slowing.

According to Curran, past recessions have yielded a more solid recovery.

"They are what they call 'V’ recessions—a sharp downturn and then a sharp upturn," he says. "People are referring to this as an 'L’ recession. It bottoms out, but then it stays flat."

And that’s a bit of a relief given how deep the fall has been. The banter about town among those who are just weary of the bad news is that flat is the new up—flat is something to celebrate.

"It’s not time to throw a party, but it's better," Curran says.

Bright spots—and by bright he means less bleak than the rest of the market—are netbook, wireless 802.11n technology and NAS (network-attached storage) sales. As for vertical industries, government and health care remain more stable than everyone else.

The GTDC released the new numbers at the organization's annual Investor Relations Conference, an event designed to bring together IT distribution and other technology executives with institutional investors to help them understand the business.

According to Curran, distributors and even a financial analyst said at the event that one of the factors that had impacted the sharp sales decline in this recession is easing up—access to credit. And while the bulk of economic stimulus money isn’t expected to be available this year, Curran says sales may be picking up in anticipation of those funds.

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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