SMB Drives Synnex Q2 As Profits Rise, Sales Fall

The Fremont, Calif.-based distributor kept its streak of profitable quarters alive with a $59.3 million profit, thanks to strong SMB sales, but the company's sales dipped 0.5 percent to $2.48 billion. Synnex's operating margins, meanwhile, grew to 2.39 percent from 2.17 percent from the same quarter one year ago.

Synnex President and CEO Kevin Murai emphasized the Synnex's 25 years of profitability and said the streak was "a key differentiator" between Synnex and other IT distributors. "We continued to grow at an above-market rate," Murai said. "Our momentum has continued through Q2."

[Related: Huawei Teams With Synnex For All-Out U.S. Channel Offensive ]

Synnex saw strong SMB sales for the second quarter, but retail and consumer market were softer, Murai said. He added the company saw strong organic growth in the second quarter that was offset by Synnex's continued transition of certain revenue to a fee-for-service logistics relationship.

While Synnex's distribution revenue fell 0.8 percent year-over-year to $2.44 billion, the company's Global Business Services revenue jumped more than 23 percent to $47.7 million. While GBS is a small part of Synnex's overall business, Murai said the company has big plans for its services business and expects it to grow significantly going forward.

"We're serious about services," Murai said.

Murai said he expects Windows 8 and ultra-thin notebooks will help produce a good third quarter and back-to-school buying season. For its fiscal third quarter, Synnex forecasts revenue in the range of $2.55 billion to $2.65 billion, with net income between $34.4 million and $35.7 million, or earnings per share between $0.91 and $0.95.

PUBLISHED JUNE 25, 2012