Arrow Electronics, Inc.
) operating unit Arrow Enterprise Computing Solutions (ECS)
recently signed a distribution agreement with Emerson Network
Power. This will introduce Emerson's wide range of enterprise
data center infrastructure management (DCIM) services to Arrow's
distribution channel database catering to the needs of its
comprehensive clientele in the United States.
The venture undertaken is to directly distribute Emerson's
real-time infrastructure optimization Trellis portal in order to
improve the efficacy of the data center. Moreover, the company
will be also managing and supporting data center's IT and
facilities systems through supplying a wide range of DCIM
solution including Avocent Universal Management Gateway, Avocent
DSView, MergePoint Unity, ACS and PM3000 solutions. By adding
these solutions to its line card offerings in the United States,
Arrow will make the entire infrastructure management of the data
centers less costly and more efficient for its
Management was appeased regarding its decision to conflate
with Emerson, as this venture would allow Arrow to provide
best-in-class data center management through integrating with
Emerson's DCIM solution. These solutions would easily cater to
the needs of Arrow's data center customers.
Recently the company reported revenues of $1.59 billion, up
3.0% year over year in its Global enterprise computing solutions
(ECS) segment. The rise in the sales was on the back of the
Americas' solid performance in the core value-added distribution
business and Europe's strong performance even amid the weak
market conditions due to the company's matrix expansion. We
believe that this agreement would further bolster the performance
of this segment moving ahead.
However, it should be noted that the company's domestic and
foreign operations are subject to significant competitive
pressures from the likes of
Richardson Electronics Ltd.
). Avnet very recently acquired Genilogix LLC for strengthening
its HP software solutions and Cloud services. Hence, to compete
successfully, Arrow must excel in terms of product quality and
innovation, customer service, technical and computing
capabilities and price competitiveness.
The current Zacks Consensus Estimates for Arrow are $1.09 and
$4.27 for the fourth quarter of 2012 and for 2012, respectively.
The estimates represent a year-over-year growth of (21.34%) for
the fourth quarter and (17.78%) for 2012. The company currently
retains a Zacks #5 Rank, which translates into a short-term
'Strong Sell' rating. We also maintain a long-term 'Neutral'
recommendation on the stock.
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