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Ingram Micro Acquires CloudBlue

Zacks Equity Research

Technology distribution company, Ingram Micro (IM) recently announced its acquisition of CloudBlue Technologies, Inc. (CloudBlue), a leading provider of enterprise IT asset disposition, onsite data destruction and e-waste recycling services worldwide. Financial details of the deal were not disclosed.

The acquisition will help Ingram Micro to expand its supply-chain solutions portfolio. Moreover, the addition of CloudBlue services will also help Ingram to simplify the complexity associated with the management of IT assets and consumer electronics, in accordance with environmental and data security regulations.
CloudBlue provides its customers with secure and sustainable reverse logistics solutions, which create a protected business environment. It is one of the leading providers of enterprise IT asset disposition and onsite data destruction services including e-waste recycling. The addition of CloudBlue Technologies will boost Ingram’s Logistics revenues.

Ingram Micro reported revenues of $10.3 billion in the second quarter of 2013, up 17.4% from $8.8 billion in the year-ago quarter. Improvement in revenues was mainly due to contributions from the Brightpoint and Aptec Holdings acquisitions.

Integration of BrightPoint is on track, with revenue contribution and expected cost synergies likely to make BrightPoint a key driver of growth.

We believe that the improving IT spending trend will help Ingram to post better results going forward. Moreover, management’s focus on the high-margin market and strategic acquisitions to grow market share are encouraging.

Though the company’s significant European exposure and high debt burden are concerns, we are positive about Ingram Micro’s strategic relationship with network giant Juniper Networks Inc. (JNPR), as well as tech giants such as Hewlett-Packard Company (HPQ), IBM Corp. (IBM) and Microsoft Corp.

Currently, Ingram Micro has a Zacks Rank #3 (Hold).

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