Avnet Extends Agreement with Cisco

Zacks

Electronics and IT distributor Avnet Inc. (AVT) recently announced the expansion of its agreement with Cisco (CSCO) to distribute its high-value specialty data center products in Latin America and the Caribbean. Since Cisco is the largest networking company in the world, with products ranging from switches and routers to security solutions and its unified computing system (:UCS), the expansion further strengthens Avnet’s core business of distributing electronic components.

The agreement will help Avnet to provide its channel partners with better solutions for data centers. It will also enable Avnet to provide independent software vendor (:ISV), system integrator (SI), and value-added reseller (VAR) partners with technical expertise, training and development and financial and logistics services, thus improving Avnet’s revenue stream and possibly its market share.

Avnet reported revenue of $6.59 billion, up 4.5% from $6.31 billion in the year-ago quarter. Revenues in the quarter were toward the higher end of management’s guidance range of $6.15 billion to $6.75 billion and above the Zacks Consensus Estimate of $6.46 billion.

Avnet Inc. (AVT or the company), based in Phoenix, AZ, is an industrial distributor of electronic components, enterprise computer and storage products and embedded subsystems. Avnet distributes electronic components and computer products as received from suppliers. It also provides engineering design, materials management and logistics services, system integration, and configuration and supply chain advisory services.

 Avnet’s leading position in electronics distribution, continuous cost cutting initiatives and acquisition synergies are encouraging. It does however see significant competition for both its domestic and foreign operations, especially from archrival Arrow Electronics Inc. (ARW).

Currently, Avnet has a Zacks Rank #3 (Hold). Investors may also consider stocks from the same sector such as Quantum Corp. (QTM) with a Zacks Rank #1 (Strong Buy).

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