Avnet Conflates with OCZ Technology

Zacks

Electronic parts distributor, Avnet Inc.’s (AVT) business segment, Avnet Electronics Marketing Americas, recently extended its distribution agreement with OCZ Technology Group, Inc. (OCZ) through its operating unit, Avnet Embedded.

Currently, the company is engaged in supplying solid-state drive (SSD) products from OCZ Technology in the Americas, Europe, the Middle East and Africa. Now, with the extension of the contract the company will also distribute advanced SSD product lines in the growing markets of Latin America and the Caribbean islands.

In addition, Avnet shall also render various support services such as customized pre-sales solutions, technical services, several types of logistics services, marketing and financing solutions for augmenting the supply of OCZ Technology’s product lines in the Latin American and the Caribbean markets. Management stated that the expanded agreement with OCZ Technology would not only broaden the company’s product portfolio in the emerging markets but also address the need of improved storage solutions of the customers more efficiently.

The company’s expansion plans comprising extension of the existing operations and adding new products to its product lines, particularly in the growing markets, are expected to boost its long-term potential. During the fourth quarter of fiscal 2012, revenues from Avnet’s Electronics Marketing (:EM) in the Americas surged 8.9% from the year-ago quarter to $1.4 billion. Now, this move is seen as a positive aspect for the company's Electronics Marketing (:EM) business, which will help driving the segment's performance going forward.

Avnet faces fierce competition from big players in the semiconductor industry. One of the stalwarts here is Arrow Electronics Inc. (ARW), which remains an immensely formidable rival, especially in the current times. In addition, there are several other big players such as Wesco International Inc. (WCC) and Anixter International Inc. (AXE) in the industry.

The current Zacks Consensus Estimates for the first quarter of fiscal 2013 and for fiscal 2013 are 84 cents and $4.11, representing a year-over-year growth of (6.79)% and 1.33%, respectively. The company currently retains a Zacks #4 Rank, which translates into a short-term ‘Sell’ rating. However, we are maintaining a long-term ‘Neutral’ recommendation on the stock.

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