World's largest distributor of electronic components and
enterprise computing products
Arrow Electronics, Inc.
) recently declared the acquisition of Global Link Technology, Inc.
(Global Link). The financial terms and conditions of the deal are
not disclosed yet.
Global Link, based in Centennial, Colorado, is mainly engaged in
the distribution of a range of Electronics Asset Disposition (EAD)
services, which includes elimination and protection of data,
restoration as well as remarketing of electronic components.
The acquisition appears to be a quite profitable one for Arrow
as it will diversify and broaden the company's product portfolio.
Management stated that this acquisition is likely to solidify the
company's foothold in the EAD market, especially in the Rocky
Arrow has retained a keen eye out for making profitable
acquisitions for its market expansion; specifically in the EAD
market, improving its product offerings and maintaining its leading
position in the global market. The company recently declared its
decision to acquire Redemtech, Inc. (Redemtech). The acquisition is
expected to be quite beneficial for Arrow as Redemtech has been
yielding favorable results of late and is likely to generate
revenues of nearly $60 million in 2012.
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 business in the quarter.
Arrow currently faces ominous competition from major players of
the industry, which includes
Richardson Electronics Ltd.
) 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.
ARROW ELECTRONI (ARW): Free Stock Analysis
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