Arrow Looks Evenly Poised


Arrow Electronics’ (ARW) seems to be growing steadily, either by expanding operations in new geographies or by winning deals. The company has recently signed a distribution agreement with Critical Link, an embedded systems developer with expertise across a broad range of electronic applications.

As per this agreement, Arrow will be distributing Critical Link’s ARM and DSP-based system-on-modules (SoMs) and would supply development kits to Critical Link’s customers in North America. Arrow would be instrumental in expanding Critical Link’s embedded solutions and offerings and will also help the company’s clients in the designing and marketing of their products quickly and effectively.

Furthermore, Arrow announced the opening of a new facility in Sao Paulo, Brazil, which will strengthen the company’s presence in value recovery (electronic and IT asset disposition) and will provide a strong foothold in the reverse logistics business.

Moreover, Arrow will shift its existing custom computer system integration operations in Brazil to the Sao Paulo facility. This is expected to expand the company’s presence in the region.

Arrow expects this new facility to be operational by May. This facility is expected to provide efficient and environmentally responsible asset recovery, data sanitization, testing and screening, recycling, remarketing, service parts management and product returns management services for a wide range of electronic equipment manufacturing companies.

Arrow is funding its expansion plans by issuing senior unsecured notes worth $600.0 million in two parts. The company filed for registration with the U.S. Securities and Exchange Commission. This will help increase its fund availability, supporting the working capital requirements, capital expenditure and provide additional funds for potential acquisitions.

A couple of months back , Arrow entered into a distribution agreement with Altia, Inc, which helped Altia’s advanced and customized graphical user interfaces reach a broader customer base through Arrow’s key silicon partners.

A part of Arrow’s strategy is to support various companies by offering customized solutions. However, it should be noted that Arrow faces stiff competition from the likes of Richardson Electronics Ltd. (RELL) and Avnet, Inc. (AVT).

Currently, Arrow has a Zacks Rank #3 (Hold). Its close competitor, Anixter Intl. (AXE), which posted decent second-quarter 2013 results, has a Zacks Rank #2 (Buy).

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