Electronics and IT distributor
) kicked off the new year with the acquisition of
California-based IT professional services company, TSSLink Inc.
Financial details of the deal were kept confidential.
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Nine-year-old TSSLink Inc. specializes in delivering technical
support, consulting and outsourcing services for storage and
virtualization solutions, audit preparation services, field
product installation and implementation, and end-user training.
Post closure of the acquisition, TSSLink will be integrated into
Avnet's Technology Solutions segment. Management stated that the
acquisition would be immediately accretive. Moreover, Avnet
expects the new unit to support its targeted return-on-capital
(ROC) of 12.5%.
There is no doubt that TSSLink's capabilities will be a good
supplement to Avnet's technology offerings and consolidate its
position as a key player in the IT distribution market.
Revenues from Avnet's Technology Solutions segment fell 15.1%
from the year-ago quarter to $2.21 billion due to low demand in
the EMEA region. But the company expects Technology Solutions
revenues within the range of $2.60 billion and $3.00 billion,
implying a decent sequential comparison.
We believe that with TSSLink, Avnet will be able to achieve or
even surpass its expectations.
Avnet has had a keen eye for profitable acquisitions that have
facilitated market expansion and technological upgrades. During
2012, the company acquired as many as 13 new units. These
acquisitions are expected to augment the company's product
portfolio and enhance its performance quite comprehensively going
Avnet sees significant competition for both its domestic and
foreign operations. It has an archrival in
Arrow Electronics Inc.
), although other big players such as
Anixter International Inc.
Richardson Electronics Ltd.
) are also not to be discounted.
Currently, Avnet has a Zacks #3 Rank (Hold). The stock is
performing better than its peer Arrow, which has a Zacks #4 Rank