Arrow, Avnet Earnings Indicate Enterprise Spending Uptick

On Monday, Arrow Electronics reported $87 million in net income, or 71 cents per diluted share, on sales of $4.24 billion for the first fiscal quarter. Analysts were expecting earnings of 66 cents per share, according to Thomson Reuters.

In the year-ago quarter, the distributor earned $26.7 million, or 22 cents per share, on sales of $3.42 billion. Arrow said it expects second-quarter earnings to be in the range of 78 cents to 86 cents per share on sales of $4.3 billion to $4.6 billion. Analysts were predicting earnings of 66 cents per share and $4.24 billion in revenue for the June-end quarter.

Avnet, meanwhile, also surpassed earnings expectations for its third fiscal quarter ended April 3. Most of Arrow's growth came from the components side, which saw a 33 percent uptick in sales, but the Melville, N.Y.-based company's Enterprise Computing Solutions (ECS) group saw a 3 percent sales increase to $1.11 billion. It was the first year-over-year increase in sales since the fourth quarter of 2008 for ECS.

"Storage, software and services again grew at a healthy double-digit rate year over year as customers moved forward with improving their capabilities on existing server infrastructure. We saw strong performance in our solutions segments of virtualization, security and networking, while industry-standard servers also posted year-over-year growth," said Mike Long, Arrow CEO, in a statement.

The weakest segment was margins in proprietary servers, particularly in North America, which resulted in a year-over-year decline in sales in that area, Long said.

Last week, Avnet CEO Roy Vallee said he expects fourth-quarter earnings of 76 cents to 84 cents per share on revenue of $4.7 billion to $5.3 billion. That's higher than the 70 cents per share and $4.81 billion in sales that analysts were forecasting for the Phoenix-based distributor.

For its third fiscal quarter, Avnet earned $114.5 million, or 75 cents a share, compared with $15.8 million, or 10 cents a share, a year ago. Excluding special items, the company earned 76 cents a share, beating analysts' expectations of 63 cents.

Avnet also reported $4.76 billion in sales, up 29 percent and more than the $4.59 billion that analysts projected.

"The pace of recovery in our served markets remained strong this quarter as our year-over-year growth rates accelerated and revenue exceeded expectations at both operating groups for the third consecutive quarter," Vallee said in a statement.

The Avnet Technology Solutions group boasted a 13.5 percent increase in sales to $1.87 billion, with sales in the Americas gaining slightly higher at 14.1 percent.

Arrow shares were trading at $32.20 Monday morning, up $1.70 per share, or 5.5 percent, after the earnings were released. Avnet shares also received a slight bump on as shares were up 83 cents, or 2.6 percent, to $32.80.