Avnet posted better-than-expected fourth-quarter results. The
guidance, however, was less than encouraging due to tepid IT
spending environment. Avnet's leading position in electronics
distribution, continuous cost cutting initiatives and acquisition
synergies are encouraging. A significant portion of the company's
revenues comes from the sale of semiconductors, which is a cyclical
industry characterized by changes in technology and manufacturing
capacity and is subject to significant market upturns and
downturns. Moreover, the company faces stiff competition in both
domestic and foreign operations, especially from archrival Arrow
Electronics. Thus, we reiterate our Neutral recommendation on
Based in Phoenix, AZ, Avnet Inc., (AVT) is one of the world's
largest distributors of electronic components and computer
products. The company's customer base includes original equipment
manufacturers (OEMs), electronic manufacturing services (EMS)
providers, original design manufacturers (ODMs), and value-added
resellers (VARs). Avnet maintains an extensive inventory, including
electronic products from over 300 component and system
manufacturers, which it distributes to customers worldwide. The
company distributes products for companies like International
Business Machines Corp. and Hewlett-Packard Co.
The product set consists of semiconductors (approximately 47.9%
of fiscal 2014 revenues), computer products (38.4%), passives, and
electromechanical & other (10.8%) and connectors (2.9%). Avnet
operates in two segments Electronics Marketing (EM) and Technology
The EM segment distributes semiconductors and Interconnect,
passive and electromechanical devices (IP&E), and provides
supply chain management, inventory replenishment system and
non-complex engineering design services. In fiscal 2014, the EM
segment generated 60.1% of total sales (59% of 2013). The TS Group
distributes mid- and high-end servers, data-storage gear,
networking equipment and software services. Additionally, in fiscal
2014, the TS segment generated about 39.9% of total sales (41% in
On a geographical basis, Avnet generated approximately 40% of
its revenues from operations in the Americas in fiscal 2014 while
Europe, the Middle East and Africa (EMEA) contributed about 30%.
The Asia/Pacific region accounted for 30% of revenues.
Avnet's major competitors include Arrow Electronics Inc., Ingram
Micro Inc., Future Electronics and World Peace Group.
Avnet, Inc. (AVT): Read the Full Research
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
AVNET (AVT): Free Stock Analysis Report
To read this article on Zacks.com click here.