The Best And Worst Channel Company Stocks Of 2014
Channel Stocks: Gainers Lead Losers 2-to-1 In 2014
In 2013, every publicly traded solution provider and distributor on our watch list saw the value of their stock grow by double digits, riding that year's huge run-up in the stock market.
In 2014, the results weren't quite as dramatic, but the year was still generally a pretty good one for publicly traded solution providers and distributors. Of the 24 publicly traded solution providers and distributors on our watch list, 15 recorded share price gains last year while nine saw their share prices decline.
How does that compare to the stock market overall? In 2014, the Dow Jones Index was up 7.52 percent while the Nasdaq was up more than 13.40 percent.
Here's a look at which companies' stock did well in 2014 and which ones did not.
CDW
CEO: Thomas Richards
Dec. 31, 2013: $23.36
Dec. 31, 2014: $35.17
Change: +50.56%
CDW, No. 8 on the 2014 CRN Solution Provider 500, was on a strong growth trajectory in 2014 and reported significant earnings growth each quarter of the year. In November, the company struck a deal to acquire a stake in Kelway, an $850 million, London-based solution provider.
For the first nine months (ended Sept. 30) of 2014, CDW reported sales of $9.02 billion, up 12 percent from $8.06 billion in the same period in 2013. Net income for the nine months was $193.1 million, up a whopping 165.4 percent from $72.8 million in the same period one year before.
ePlus Technology
CEO: Phillip Norton
Dec. 31, 2013: $56.84
Dec. 31, 2014: $75.69
Change: +33.16%
IT consulting firm ePlus Technology, No. 36 on the 2014 CRN Solution Provider 500, continued investing in its already extensive managed services practice last year. It opened its third and largest managed services center in Raleigh, N.C., in February to stay on top of customer demand.
For the first six months (ended Sept. 30) of fiscal 2015, ePlus reported sales of $569.8 million, up more than 7 percent from $530.5 million in the same period one year earlier. Net income for the six months was $21.4 million, up more than 30 percent from $16.4 million one year before.
SS&C Technologies
CEO: William Stone
Dec. 31, 2013: $44.26
Dec. 31, 2014: $58.49
Change: +32.15%
In December, SS&C Technology Holdings, No. 41 on the 2014 CRN Solution Provider 500, acquired DST Global Solutions, an investment management subsidiary of Kansas City, Mo.-based DST Systems, for $95 million.
For the nine months ended Sept. 30, SS&C reported sales of $567.1 million, up 7 percent from $530.2 million in the same nine months in 2013. Net income for the nine months in 2014 was $94.5 million, up almost 4 percent from $91.0 million in the same period one year earlier.
Tech Data Corp.
CEO: Robert Dutkowsky
Dec. 31, 2013: $51.60
Dec. 31, 2014: $63.23
Change: +22.54%
In 2014, Tech Data celebrated both its 40th birthday and robust PC sales that kept the distributor's revenue growing.
For the first three quarters (ended Oct. 31) of Tech Data's fiscal 2015, the distributor reported sales of $20.33 billion, up almost 8 percent from $18.85 billion in the first three quarters of fiscal 2014. Net income for the nine-quarter period was $94.5 million, up nearly 35 percent from $70.2 million a year earlier.
Systemax
CEO: Richard Leeds
Dec. 31, 2013: $11.25
Dec. 31, 2014: $13.50
Change: +20.00%
Systemax, No. 19 on the 2014 CRN Solution Provider 500, reported sales of $2.53 billion for the first nine months (ended Sept. 30) of 2014, up 2 percent from $2.48 billion in the first nine months of 2013. During that period, the company cut its net loss to $12.0 million from $24.0 million in the first three quarters of 2013.
Micros Systems
CEO: Peter Altabef
Dec. 31, 2013: $57.37
Dec. 31, 2014: $67.99
Change: +18.51%
Oracle acquired Columbia, Md.-based Micros Systems (No. 29 on the 2014 CRN Solution Provider 500 list) for $68 per share, or $5.3 billion, on Sept. 8. Oracle gained the solution provider's hardware and point-of-sale applications for retail, hospitality and hotel industries as a result of the deal.
Ingram Micro Inc.
CEO: Alain Monie
Dec. 31, 2013: $23.46
Dec. 31, 2014: $27.64
Change: +17.82%
Distributor Ingram Micro added a bevy of hosted services to its offerings in 2014, providing tools that the distributor said would simplify its partners' ability to deploy, manage and bill for cloud services. The distributor also expanded into the digital signage arena in 2014, and in December acquired a majority interest in Turkish value-added distributor Armada.
For the first three quarters (ended Sept. 27) of 2014, Ingram Micro reported sales of $32.53 billion, up 6 percent from $30.72 billion in the same period in 2013. But net income declined more than 25 percent to $147.7 million in the first three quarters of 2014 from $198.4 million one year earlier.
CACI International
CEO: Kenneth Asbury
Dec. 31, 2013: $73.22
Dec. 31, 2014: $86.18
Change: +17.70%
In its first fiscal quarter ended Sept. 30, CACI reported that revenue declined nearly 6 percent year-over-year to $814.7 million from $864.3 million. Net income likewise dropped more than 5 percent to $31.1 million.
CACI's primary business is serving the federal government, and the company said the lower sales were largely due to reduced material purchases and subcontract labor because of the military drawdown in Afghanistan. The company was No. 16 on the 2014 CRN Solution Provider 500.
Synnex Corp.
CEO: Kevin Murai
Dec. 31, 2013: $67.40
Dec. 31, 2014: $78.16
Change: +15.96%
Synnex enjoyed rapid sales growth in its SMB and SLED (state and local government and education) divisions in 2014 with 65 percent and 40 percent growth, respectively. The company's biggest investment during the year was in its CloudSolv cloud-automation marketplace.
For its fiscal year 2014 ended Nov. 30, Synnex reported revenue of $13.84 billion, up nearly 28 percent from $10.85 billion in sales in fiscal 2013. Net income grew more than 18 percent year-over-year to $180.0 million from $152.2 million in fiscal 2013.
Insight Enterprises
CEO: Kenneth Lamneck
Dec. 31, 2013: $22.69
Dec. 31, 2014: $25.89
Change: +14.10%
For the first three quarters (ended Sept. 30) of 2014, Insight Enterprises reported that sales grew 3 percent year-over-year to $3.87 billion. Net earnings for the three quarters grew a healthy 11 percent year-over-year to $56.2 million.
Insight Enterprises was No. 14 on the 2014 CRN Solution Provider 500.
CGI Group
CEO: Michael Roach
Dec. 31, 2013: $33.46
Dec. 31, 2014: $38.16
Change: +14.05%
For fiscal 2014 ended Sept. 30, Montreal-based CGI reported sales of Canadian $10.50 billion (U.S. $8.43 billion), up more than 4 percent from Canadian $10.08 billion (U.S. $8.10 billion) in fiscal 2013.
Net income for the year soared more than 88 percent year-over-year to Canadian $859.4 million (U.S. $690.4 million) from Canadian $455.8 million (U.S. $366.3 million) in fiscal 2013.
CGI was No. 9 on the 2014 CRN Solution Provider 500.
Computer Sciences Corp.
CEO: Mike Lawrie
Dec. 31, 2013: $55.88
Dec. 31, 2014: $63.05
Change: +12.83%
CSC spent much of 2014 refocusing on its core businesses after divesting itself of a number of secondary businesses in 2012 and 2013. The systems integrator, No. 4 on the 2014 CRN Solution Provider 500, also continued expanding its service offerings in cloud computing and big data management.
There were also reports later in 2014 that the company was exploring the possibility of a leveraged buyout with private equity firms. At year's end, the company settled a four-year investigation by the Securities and Exchange Commission into CSC's accounting practices -- a settlement that included a $190 million penalty.
For the first six months (ended Oct. 3) of fiscal 2015, CSC reported revenue of $6.32 billion, down 1.9 percent from $6.44 billion in the first half of fiscal 2014. Net income for the six months was $297 million, down almost 27 percent from $406 million the same period one year earlier.
Accenture
CEO: Pierre Nanterme
Dec. 31, 2013: $82.22
Dec. 31, 2014: $89.31
Change: +8.62
Accenture, No. 3 on the 2014 CRN Solution Provider 500 list, named Stephen Rohleder as the new group CEO for North America in May, just days after then-U.S. CEO Jorge Benitez stepped down from the post.
For fiscal 2014 ended Aug. 31, the systems integrator reported revenue of $30.00 billion, up 5 percent from $28.56 billion in fiscal 2013. Net income for the year dropped 10 percent, however, to $2.94 billion from $3.28 billion in fiscal 2013.
For the first quarter (ended Nov. 30) of fiscal 2015, Accenture reported revenue of $8.43 billion, up 7 percent from $7.80 billion in the first quarter of fiscal 2014. Net income grew more than 10 percent year-over-year to $831.5 million.
Arrow Electronics
CEO: Michael Long
Dec. 31, 2013: $54.25
Dec. 31, 2014: $57.89
Change: +6.71%
In 2014, distributor Arrow Electronics continued its shift away from a server-heavy product portfolio in favor of higher-value, comprehensive solutions for the enterprise. That better positioned the company for long-term growth, company executives said.
For the first three quarters (ended Sept. 27) of fiscal 2014, Arrow Electronics reported sales of $16.37 billion, up nearly 8 percent from $15.20 billion in the first three quarters of fiscal 2013. Net income for the three quarters soared 44 percent year-over-year to $381.9 million.
Cognizant Technology Solutions
CEO: Francisco D'Souza
Dec. 31, 2013: $50.49
Dec. 31, 2014: $52.66
Change: +4.30%
Cognizant made a big push into several vertical industries in 2014, including finance, health care and life sciences. Those efforts got a boost with a number of acquisitions, including Cadient Group in October and TriZetto in November.
For the first nine months (ended Sept. 30) of fiscal 2014, Cognizant reported revenue of $7.52 billion, up 16 percent from $6.49 billion in the first nine months of 2013. Net income for the nine-month period was $1.08 billion, up 19 percent from $904.2 million in the same period one year before.
PC Connection
CEO: Timothy McGrath
Dec. 31, 2013: $24.85
Dec. 31, 2014: $24.55
Change: -1.21%
PC Connection, No. 24 on the 2014 CRN Solution Provider 500, is the first company on our watch list to record a decline in its stock price in 2014.
For the first nine months (ended Sept. 30) of 2014, PC Connection reported sales of $1.83 billion, up more than 11 percent from $1.64 billion in the same period in 2013. Net income for the nine months totaled $30.7 million, up 19 percent year-over-year from $25.8 million.
Avnet
CEO: Rick Hamada
Dec. 31, 2013: $44.11
Dec. 31, 2014: $43.02
Change: -2.47%
In September, Phil Gallagher stepped down as global president of Avnet's financially struggling Technology Solutions division after five years in the post. (In early January, after the close of the period covered by this analysis, Avnet named longtime employee Patrick Zammit to take over the post.)
For fiscal 2014 ended June 28, Avnet reported sales of $27.50 billion, up 8 percent from $25.46 billion in fiscal 2013. Net income was up 21 percent for the year to $545.6 million.
For the first two quarters (ended Dec. 27) of fiscal 2015, Avnet reported sales of $14.39 billion, up nearly 5 percent from $13.77 billion in the first half of fiscal 2014. Net income for the first half of the fiscal year was $291.7 million, up nearly 19 percent from $245.5 million in the first half of fiscal 2014.
ScanSource
CEO: Mike Baur
Dec. 31, 2013: $42.43
Dec. 31, 2014: $40.16
Change: -5.35%
In late August, distributor ScanSource announced a deal to acquire Brazilian distributor Network1, one week after disclosing plans to buy U.K.-based distributor Imago Group. Both were seen as part of the company's efforts to expand globally.
For fiscal 2014 ended June 30, ScanSource reported sales of $2.91 billion, up more than 1 percent from sales of $2.88 billion in fiscal 2013. But net income for the year soared 136 percent to $81.8 million from $34.7 million in fiscal 2013.
For the first quarter (ended Sept. 30) of fiscal 2015, ScanSource reported year-over-year sales growth of more than 8 percent to $791.72 billion. But net income for the quarter declined more than 1 percent to $19.2 million.
PCM
CEO: Frank Khulusi
Dec. 31, 2013: $10.27
Dec. 31, 2014: $9.52
Change: -7.30%
PCM hired longtime Ingram Micro executive Jay Miley in November to serve as the company's president, charged with managing the company's day-to-day operations, driving strategic initiatives, managing cost structures, and growing sales and gross profits.
For the first nine months (ended Sept. 30) of 2014, PCM reported sales of $1.01 billion, virtually flat from the first nine months of 2013. Net income for the period plunged more than 38 percent year-over-year to $3.9 million.
PCM is No. 27 on the 2014 CRN Solution Provider 500.
Unisys
CEO: Peter Altabef
Dec. 31, 2013: $33.57
Dec. 31, 2014: $29.48
Change: -12.18%
In December, Unisys named Peter Altabef, a 20-year channel veteran, as the company's new president and CEO. He replaced former CEO Ed Coleman, who announced in October that he would be stepping down from the job. Altabef was previously president and CEO of Micros Systems prior to its acquisition by Oracle earlier this year (see slide No. 7).
For the first nine months of 2014, Unisys reported revenue of $2.45 billion, down a fraction of 1 percent from the first nine months of 2013. But the company, No. 17 on the 2014 CRN Solution Provider 500 list, narrowed its loss year-over-year for the period to $17.8 million from $25.1 million in the first nine months of 2013.
Ciber
CEO: Michael Boustridge
Dec. 31, 2013: $4.14
Dec. 31, 2014: $3.55
Change: -14.25%
Ciber spent much of 2014 working through an ongoing restructuring effort. In June, the company named board member Michael Boustridge the company's new president and CEO, succeeding Dave Peterschmidt, who retired.
In July, Ciber unveiled additional restructuring plans with a $24 million price tag designed to push the solution provider, No. 38 on the 2014 CRN Solution Provider 500, toward sustainable growth and profit. But in October, the company said it would lay off 4 percent of its workforce (280 employees) as sales and earnings continued to fall.
For the first nine months (ended Sept. 30) of 2014, Ciber reported revenue of $644.0 million, down nearly 2 percent from $655.0 million in the same period in 2013. The company's net loss for the nine months grew more than 53 percent to $22.4 million.
Black Box Network Services
CEO: Mike McAndrew
Dec. 31, 2013: $29.80
Dec. 31, 2014: $23.90
Change: -19.80%
For the first six months (ended Sept. 27) of fiscal 2015, Black Box reported revenue of $494.1 million, virtually flat with the $493.7 million in sales the company reported for the same period in fiscal 2014. The company's net income for the six months was down 43 percent year-over-year to $7.1 million from $12.5 million.
Black Box was No. 35 on the 2014 CRN Solution Provider 500.
Perficient
CEO: Jeffrey Davis
Dec. 31, 2013: $23.42
Dec. 31, 2014: $18.63
Change: -20.45
Perficient, No. 66 on the 2014 CRN Solution Provider 500, in 2014 continued the acquisition spree it had been on in recent years. In May, the company acquired the IBM Division of Trifecta Technologies for $13.7 million. And in December it struck a deal to buy Zeon Solutions, an eCommerce IT consulting firm, for $35.7 million.
For the first nine months (ended Sept. 30) of 2014, Perficient reported sales of $330.9 million, up 20 percent from $275.9 million in the first nine months of 2013. But net income for the nine-month period grew only 5 percent year-over-year to $16.7 million from $15.9 million.
Syntel
CEO: Nitin Rakesh
Dec. 31, 2013: $90.95
Dec. 31, 2014: $44.98
Change: -50.54%
In October, Syntel, No. 40 on the 2014 CRN Solution Provider 500, slashed its 2014 earnings outlook, citing a longer sales cycle in the health-care arena.
For the first nine months (ended Sept. 30) of 2014, Syntel reported revenue of $676.1 million, up more than 12 percent from $601.5 million in the first nine months of 2013. Net income for the period grew nearly 17 percent year-over-year to $179.0 million.