), a global leader in distribution and customized logistic services
for wireless equipment manufacturers and carriers, announced that
its subsidiary Brightpoint North America L.P. has entered into a
logistic services relationship with mobile firm FreedomPop. As a
result of the deal, Brightpoint shares closed more than 6% higher
According to the deal, Brightpoint North America will provide a
variety of critical logistic services like inventory management,
Kitting, packaging, transportation management, order fulfillment
and reverse logistics. This agreement will help FreedomPop to
provide timely delivery of its devices as the company plans to
offer 1 gigabyte of free wireless data connection to its customers
through a wholesale agreement with
We have recently upgraded our recommendation on Brightpoint from
Underperform to Neutral, as the company has slowly started to gain
new orders, which may partially offset the loss of a major client
of its domestic Logistic segment. It is believed that the recent
order flows have brought momentum for the company's share price
after it plummeted over 55% last year.
Brightpoint announced that one of its major customers in the
U.S. started the process of terminating its existing contract with
the company since April 2012. Additionally, in the first quarter of
2012, gross margin, operating margin, and net margin dipped 1.5%,
0.5%, and 0.6% year over year, respectively. This has forced the
company to revise its financial forecast for fiscal 2012 downwards
twice in the last 3 months.
However, in June 2012, Brightpoint won two vital contracts as
well as renewed another important deal. The company has signed a
logistic assistance agreement with
MetroPCS Communications Inc.
) and renewed its existing logistic assistance agreement with
) to provide service to the latter's several prepaid wireless
Furthermore, Brightpoint also received a distribution and
services contract from Duracell Powermat LLC. We expect these new
deals in the high margin Logistic segment to add to the company's
margin going forward.
We are maintaining our long-term Neutral recommendation on
Brightpoint Inc. Currently Brightpoint Inc. has a Zacks #3 Rank,
implying a short-term hold rating on the stock.
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