Arrow's Agreement with Altia

Zacks

Arrow Electronics, Inc. (ARW) recently entered into a distribution agreement with Altia, Inc. This will introduce Altia’s wide range of user interface development techniques to Arrow’s distribution channel database catering to the needs of its comprehensive clientele in North America.

The venture undertaken is to directly distribute Altia’s advanced and customized graphical user interfaces with the help of the company’s key silicon partners. By adding these solutions to its offerings, Arrow will be engaged in supporting various companies, which use less costly or high power graphics.

Management expressed its enthusiasm about the partnership by stating that this agreement would allow Arrow to provide best-in-class graphical interface services in the area of medical, building control, automation and industrial control, and retail and information kiosks. These solutions would easily cater to the needs of Arrow’s clients.

Recently Arrow’s operating unit, Arrow Enterprise Computing Solutions (:ECS), signed a distribution agreement with Emerson Network Power. With this contract, the company will distribute Emerson’s wide range of enterprise data center infrastructure management (:DCIM) services to its comprehensive clientele in the United States. We believe that this latest agreement would further enhance the company’s performance moving ahead.

However, it should be noted that the company’s domestic and foreign operations are subject to significant competitive pressures from the likes of Richardson Electronics Ltd. (RELL) and Avnet, Inc. (AVT). Avnet’s operating unit, Avnet Electronics Marketing Americas, recently entered into a distribution contract with Measurement Specialties, Inc. (MEAS). Hence, to compete successfully, Arrow must excel in terms of product quality and innovation, customer service, technical and computing capabilities and price competitiveness.

The current Zacks Consensus Estimates for Arrow are $1.09 and $4.27 for the fourth quarter of 2012 and for 2012, respectively. The estimates represent a year-over-year growth of (21.34%) for the fourth quarter and (17.78%) for 2012. The company currently retains a Zacks #4 Rank, which translates into a short-term ‘Sell’ rating. We also maintain a long-term ‘Neutral’ recommendation on the stock.

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