Distribution CEOs: Economic Recovery Not On The Way

The CEOs of five of the largest IT distributors in the world aren't holding up much hope for a quick or sustainable economic recovery.

Revenue growth for their respective companies will be at best a small single-digit increase -- at best -- with some geographies lucky to fare that well, the executives said during a panel at the Global Technology Distribution Council's Vendor Summit this week in Newport Beach, Calif.

Rick Hamada, CEO of Avnet and appointed this week as chairman of the GTDC, said the North American market has slowed, while Europe continues to struggle too.

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"Usually you have one or two areas that are questionable with some areas that you can count on. That's not the case now. There's concern about the lack of momentum. We see stability. It's not deteriorating, but it's hard to make a case for optimism," Hamada said.

Hamada noted that the U.S. economy grew about 1.5 percent in the second quarter. "It's been slowing down," he said.

Mike Long, CEO of Arrow Electronics, said the U.S. economy had held up fairly well compared to other geographies, but domestic sales "started to slow significantly" after the first quarter.

Like Hamada, he doesn't see a sustained recovery coming any time soon. "We're probably in this for a little while," he said. Long added that any potential stimulus packages proposed by the government won't help beyond an initial boost.

Long compared stimulus plans to end-of-quarter vendor promotion plans. "Everybody buys for a couple days but then it slows down again," he said.

Bob Dutkowsky, CEO of Tech Data, described the current market as flat, but noted "inside of flat, there are pockets of opportunity that are outpacing flat."

While many companies are not hiring now, they are looking to gain productivity increases from current employees and IT solutions that can do that are still moving, Dutkowsky said.

"We see tools, projects with distinct ROI that can still get done. The things that are neat or flashy gizmos are hard to sell in this environment," Dutkowsky said.

Dutkowsky called on the dozens of vendor channel executives in the audience to help distributors and solution providers better market ROI to customers. "If you can help us see that, we can find opportunities even in tough economic times," Dutkowsky said.

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Alain Monie, CEO of Ingram Micro, noted that increased uncertainty of gross domestic product combined with an acceleration in the delivery and methodology of IT to the cloud has rendered any economic crystal ball even murkier.

It's also become more difficult to categorize economic growth by continent now because of the fluctuation on a country-by-country and region-by-region basis, Monie said.

"That's uncertainty we all need to deal with," Monie said.

Finally, Synnex CEO Kevin Murai noted the "underlying market has been pretty soft for more than a year now."

One area that shows significant opportunity to offset other declines is in mobility, he said. The evolution and adoption of more mobile technologies should help the IT channel avoid further economic pitfalls, Murai said.

"The underlying and key part of our strategy is we have to figure out what products are growing and who the winners are," he said, adding that the coming release of Microsoft Windows 8 and more Ultrabook PCs could spur further growth.

"That presents a good opportunity and perhaps will light a spark in spending," he said.

PUBLISHED SEPT. 14, 2012

This story was updated on Sept. 14, 2012, at 11 a.m. PST, to correct that Alain Monie is CEO of Ingram Micro.