Avnet Q3 Revenue, Earnings Down But Meets Street Expectations

Avnet earned $147.6 million, or $1.00 per diluted share, on sales of $6.28 billion in the third fiscal quarter ended March 31. Analysts had been predicting earnings of 99 cents per share on $6.28 billion in sales for the March-end quarter. The results compare to net income of $151.0 million, or 98 cents per diluted share, on $6.67 billion in revenue in the year-ago quarter.

"Although the current economic environment and rate of recovery varies in each region, our team was able to deliver results for our third quarter that were in line with our expectations," said CEO Rick Hamada in a statement.

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Hamada also noted that year-ago results were near the peak of a recovery that helped drive especially strong levels of profitability at that time.

"The subsequent supply chain inventory correction, which has led to negative organic growth at [Avnet Electronics Marketing] in the first three quarters of this fiscal year, appears to be nearing an end as EM's sequential revenue growth has returned to a more normalized seasonal level," Hamada said.

Meanwhile, Avnet Technology Solutions reported year-over-year operating income growth of 19 percent even though revenue declined $223 million, or 8 percent, according to the distributor.

Avnet Technology Solutions sales were $2.52 billion in the quarter, including $1.37 billion in the Americas (down 9.1 percent), $744.8 million in EMEA (down 12.1 percent) and $409.3 million in Asia (up 4 percent).

Industry-standard servers and professional services saw double-digit year-over-year revenue growth, but that was offset by a decline in microprocessors and other computing components, according to Avnet.

Avnet made two acquisitions in the quarter: Ascendant Technology and asset disposal specialist Canvas Systems.

"As demand for data center solutions and cloud technology create more opportunities for the channel, we continue to increase the value we deliver to our VAR partners in mature markets and expand the breadth of products and services we can offer in higher-growth developing markets," Hamada said in the statement.

For the fourth fiscal quarter ending June 30, Avnet expects earnings per share of between $1.05 and $1.30 on sales of $6.30 billion to $6.90 billion. A consensus of analysts' opinions project earnings of $1.07 on $6.50 billion in sales for the current quarter.

Avnet shares were trading at $36.20 Wednesday morning, up $1.03, or 2.9 percent.