Tech Data Corp. (TECD) Continues to Thrive on Partnerships
Wholesale distributor of IT products, Tech Data Corp. (TECD) continues to thrive on partnerships as a means of broadening its product portfolio. To-date, in fiscal 2014, the company has signed a number of partnership agreements with notable enterprises, which are expected to drive its top-line growth going forward.
Recently, the company expanded its partnership with Oracle (ORCL), which will enable it to sell Oracle’s cloud applications in the United States.
Tech Data recently entered into a distribution agreement with Kanex, to provide the latter’s products to its channel of solution providers throughout the United States and Latin America. Kanex is a leading provider of innovative Apple and iOS connectivity solutions for homes and businesses worldwide.
Tech Data has also entered into a partnership with leading network and cloud solutions provider, Earthlink Holdings Corp. (ELNK). The deal enables Tech Data to provide EarthLink's suite of managed cloud and support services to solution providers in the United States through the company's TDCloud business unit.
Further, Tech Data expanded its distribution agreement with International Business Machines (IBM) in an attempt to make IBM’s SoftLayer technologies available to its solution providers throughout the United States and Europe.
Moreover, Tech Data’s partnership with the likes of Cisco, VMware, Google and Xerox will drive its top line growth over the long term.
Recently, Gartner revised down its IT spending forecast to 2.1% from 2.8%. As Tech Data is heavily dependent on IT spending, we believe that this revised estimate does not bode well for the company. However, these partnerships will somewhat dilute the negative effect of lower IT spending in our view.
Moreover, we believe that Tech Data will benefit from pent-up demand for personal computers in the rest of 2014. Further, the company’s improving execution (particularly in Europe), superior customer service and improving market share in the Americas are the major positives.
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