'Ongoing Demand' Helps Synnex Beat 3Q Expectations

The Fremont, Calif.-based distributor earned $30.9 million, or 86 cents per share, on $2.18 billion in sales. Analysts had predicted earnings of 74 cents on $2.11 billion in sales for the third fiscal quarter, according to Thomson Reuters. The results compare to $22.5 million in earnings, or 68 cents per share, on $2 billion in revenue for the third quarter last year, according to Synnex.

“I am very pleased with our revenue growth and operating margin expansion,” said Kevin Murai, Synnex president and CEO, in a statement Wednesday.

Distribution sales from continuing operations were $2.15 billion, an 8.8 percent increase over the prior-year quarter, while revenue from Synnex's Global Business Services group was $31 million in the quarter, a 22-percent increase over the third quarter last year.

“Our Global Business Services segment performed well as it benefited from the ramp of recent competitive wins. Also, we continued to leverage our infrastructure to drive even greater operating margin expansion in both the distribution and Global Business Services segments of our business," Murai said in the statement.

For the current quarter, Synnex expects net income to be between $34 million and $35 million, or 94 cents to 97 cents per share, on sales between $2.3 billion and $2.4 billion. A consensus of analysts' estimates for the current quarter predicted earnings of 88 cents on $2.32 billion in sales, according to Thomson Reuters.

“For the fiscal fourth quarter we believe the demand environment in North America will remain relatively stable and in-line with normal seasonal trends," Murai said in the statement. "Also, the year-over-year reduction of revenue attributable to our July 2010 sale of certain of our legacy platform manufacturing contracts is expected to be largely offset by new revenue from our February 2010 acquisition of Jack of All Games. From a profitability perspective, we expect to leverage our cost structure and continue to deliver industry leading margins.”

Shares of Synnex closed at $25.90, down 2 cents, on Wednesday.