Tech Data Eyes Acquisitions, Emerging TechnologiesBy Pedro Pereira | Print
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The distributor's new CEO, Bob Dutkowsky, says the company is getting its financial challenges in Europe under control, and is ready to move forward.Tech Data's new man in charge, industry veteran Bob Dutkowsky, says he believes the distributor is on track to overcome its financial challenges in Europe and the Middle East.
"I'm confident that the steps the company has taken so far were well thought out and well executed," Dutkowsky told The Channel Insider the week of Nov. 6, some 30 days after taking over as CEO of the $20 billion distributor
And that's only one of a number of conclusions the new chief executive has reached since taking the helm at Tech Data, based in Clearwater, Fla. Overall, Dutkowsky said, he has concluded that Tech Data is every bit as well run as he had expected, and that its relationships with IT vendors and with tens of thousands of solution providers are even deeper than he could have imagined.
While acknowledging the depth of the legacy Raymund has left in the company he led for 20 years, Dutkowsky nevertheless said he is ready to lead the distributor forward.
First, there is the matter of underperformance in the European and Middle East operation. The company reported a net loss of $155.5 million in its most recent quarter that it attributed to restructuring costs in the region. Sales, however, increased by 2.7 percent to $4.9 billion from $4.8 billion in the year-ago period.
Tech Data will report results for the quarter ended Oct. 31 later in November.
While leaving room for additional correctional steps, Dutkowsky said he believes the European situation is under control.
"It would be very easy for a new guy to come in and second-guess all the actions in Europe. I'm not doing that," he said.
With that in mind, Dutkowsky already has started working on refining Tech Data's strategy to spur growth and profitability. Specifically, he said he is looking into geographies where Tech Data has no presence and into emerging technologies.
Tech Data, which as a distributor is second in size only to Ingram Micro, does business in the Americas, Europe and the Middle East, and exports to Africa. But the company's coverage has a gaping hole in fast-growing Asia, a developing market with enormous potential.
Without getting specific, Dutkowsky said geographic expansion is in the cards, and he indicated that one way to accomplish this is through acquisitions.
"There are lots of opportunities out there for the largest players to strengthen their business via acquisition," he said, adding Tech Data is exploring some of those opportunities. "I think you'll see us become more acquisitive."
Tech Data will be joining distributors such as Avnet and Arrow Electronics on the acquisitions path. The week of Nov. 6 Avnet disclosed it is acquiring Access Distribution from General Electric for $412.5 million in cash. In October, Arrow said it was buying Alternative Technology, an independent specialty distributor in Englewood, Colo.
Avnet CEO Roy Vallee, CEO of Avnet, based in Tempe, Ariz., said the reason large distributors are stepping up their acquisition activities is because they are getting a higher return on investments than ever before and, as a result, their cash flow has improved.
Dutkowsky said he will put his background at IT vendors to good use as he leads Tech Data forward. He is reviewing which technologies the distributor needs to add or put a stronger focus on so it can keep up with the market, he said.
As examples, he cited security, RFID (radio-frequency identification), business process applications and VOIP (voice over IP) among the technologies that may get a stronger focus by the distributor. Dutkowsky said Tech Data also will be paying attention to such trends as virtualization, the move toward standardization and technology consolidation.
"Companies like Tech Data have to be as nimble as the technologies are," he said. "The beauty of a company like this is it never sits still."