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Tech Data cautious on spending outlook

Microscope contributor

IT spending continues to improve according to Tech Data but it is not yet confident that the recession is over.

The broad line giant has filed third quarter sales for the period ended 31 October of $5.6bn, down 8.1% on last year but up 8.8% sequentially. Profits went up to $43.1m compared to $16.8m in 2008.

“While inconsistent across the entire IT industry, it is clear that overall IT spending is beginning to show signs of an improving outlook for the first time in four quarters,” said Tech Data CEO Bob Dutkovsky.

Sales at the European operation fell 5.7% on last year inconstant currency to $3.2bn, but grew 14.2% sequentially, and in the Americas turnover dropped nearly 11% on 2008 but went up 2.6% on Q2.

Total debt was $459m compared to $390m a year earlier and net cash was $785.4m, indicating that the company has financial headroom to make acquisitions.

The operational highlights included the Advanced Infrastructure Solutions biz in the US and in Europe the Azlan mid-market outfit and the Brightstar joint venture were the best performers.

However Dutkovsky warned financial analysts in a conference call that while reseller customers were in more buoyant mood that in recent quarters, the market was heading toward a market size similar to 2008.

“Things are improving but I hope you are not interpreting that we are declaring victory and the recession is over and IT spending has returned to the good old days, it is still going to be a lot less than it was before,” he said.

This conservative attitude fed through into forecasts for the fiscal final quarter of 2008, in which Tech Data expects to grow sales in the low to mid single digits.


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