Tech Data Corp. (TECD) and Trend Micro Inc. have entered into a partnership to combine the latter’s Licensing Management Platform (“LMP”) with the former’s Solutions Store.
Trend Micro, a cloud security and virtualization services provider, will leverage Tech Data’s StreamOne Solutions Store, which enables resellers to sell Cloud services and products from software vendors to customers. Moreover, with the current integration, Tech Data’s managed service providers (“MSP”) can access Trend Micro SaaS security products.
The collaboration of Tech Data and Trend Micro will allow resellers to better serve their customers in an efficient and innovative manner. This will bolster the reseller customer base, which will ultimately help Tech Data earn higher revenues going forward.
Recently, Tech Data extended its partnership with Microsoft Corporation (MSFT), which will enable resellers to easily download select Microsoft products, including Microsoft Office suite through Electronic Software Delivery (“ESD”). Tech Data has been diversifying its operations to further penetrate the small to mid-size business (“SMB”) segment. We believe that these partnerships will help it further penetrate this segment going forward.
Currently, Tech Data has partnerships with two of the largest PC makers - Apple Inc. (AAPL), Hewlett-Packard Company (HPQ), as well as Microsoft, which also has significant exposure to the segment by virtue of its OS and other software. Although sluggish PC shipments are expected to hurt Tech Data in the coming quarters, we believe that its diversified business model will help it offset any significant weakness going forward.
However, we believe that the IT distribution industry is mature and we are concerned about aggressive industry pricing and weakness in the company’s European operations (approximately 60.0% of revenue).
Moreover, the ongoing macroeconomic scenario and a tepid IT spending outlook in 2013 remain headwinds going forward.
Currently, Tech Data has a Zacks #4 Rank (Sell).
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