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Arrow Enhanced its Product Profile

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Arrow Enterprise Computing Solutions, an operating unit of New York-based Arrow Electronics Inc. (ARW), recently declared that it has included two new services, UC in the Cloud solutions and Live Virtual Help Desk services. With the addition of these solutions, the company would expand its service profile in the North American region.

Arrow’s UC in the Cloud services controlled by Meetrix will provide an advanced, integrated and secured communications solution to various types of small and mid size companies. This software-as-a-service solution will augment the communication services related to Internet protocol and business dealings.

The company’s association with Live Virtual Help Desk is expected to enhance its remote infrastructure-management services. Arrow will offer various technical solutions along with increased-margin and annuity-based service to the solution providers. Management averred that the company’s wide service range would surely mitigate the increasing demand in the industry and will also help enhancing the revenue streams of the solutions provider.

The company’s broad portfolio of products and services and its continued efforts to provide maximum consumer satisfaction have both elevated its position and rendered it more secure to hold a substantial market share in the present scenario. Arrow has retained a keen eye out for its market expansion through strategic acquisitions in the global market. The company recently declared the acquisition of Global Link Technology, Inc. (Global Link). Management stated that this acquisition is likely to solidify the company’s foothold in the EAD market, especially in the Rocky Mountain region.

However, the company recently reported total sales of $5.15 billion in the second quarter of 2012, down 7% year over year and 5.3% sequentially. The current macro-economic challenges prevailing in the European region and slow growth in China adversely affected the company’s businesses in the quarter.

Arrow currently faces ominous competition from major players of the industry, which include Richardson Electronics Ltd. (RELL) and Avnet Inc. (AVT) in the industry. In order to retain its position in the global market, it is imperative that the company continues to make such momentous undertakings, keeping in mind the betterment of the organization in both the long and short run.

The current Zacks Consensus Estimate for the third quarter of 2012 is $1.04, reflecting a year-over-year growth of (13.33%). Estimates for 2012 and 2013 are $4.54 and $5.06, representing annual growth of (12.50%) and 11.33%, respectively. We currently maintain an ‘Underperform’ recommendation on Arrow. The stock carries a Zacks #3 Rank, translating into a short-term (1-3 months) ‘Hold’ rating.

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