Financial Picture Looking Up for Distributors

We keep hearing that the recession is over, and yet, for many companies and individuals, it sure doesn't feel as though it's over. Rising markets and positive comments from leaders aside, there are still a lot of firms struggling with declining revenues and a lot of folks looking for jobs.

There is some evidence, though, that things are looking up in the channel. If the big distributors are bellwethers for channel players of all sizes, then the financial picture for partners really is improving -- or should be soon.

Synnex, not exactly the biggest of distributors but still a player, clocked in this week with a very good fiscal third quarter that beat analysts' expectations. The company's year-over-year quarterly revenues dipped but only slightly (by about 2 percent), and that passes for good news these days. Profits actually rose year-over-year in Q3, and that's just plain good news.

Analyst are making positive noises about Tech Data, too, which suffered a revenue shortfall in its Q2 but obliterated analysts' expectations with its earnings report back in August. Tech Data folks themselves say that they see the market stabilizing somewhat in the Americas, and Wall Street types are looking for a better-than-expected Q3 from the distribution giant.

Of course, a couple of mostly positive -- or, at least, not negative -- quarterly earnings reports from a couple of channel companies doesn't mean that happy days are here again. (Happy days like the ones we all knew for the better part of the last 20 years or so seem unlikely to return.) But these upbeat reports could mean that, along with Wall Street (we hope), financials in the channel have hit bottom and are bouncing up again.  

Or, we could be setting ourselves up for another bubble and more disappointment and pain. But this recovery -- if we're actually in one -- seems to have a slow-and-steady feel, not the rocket-fueled feel of a boom. Then again, we at RCPU remain largely pessimistic about the long-term prospects for the economy as a whole. But, hey, we don't claim to be experts (although we seem to remember some "experts" being the folks who got us into such trouble in the first place).

We digress. For the time being, good news for distributors seems like -- and really should be -- good news for the channel as a whole. Let's hope it is. To quote (directly, we think) Canadian soft-rock legend Anne Murray, we sure could use a little good news today.

How's your financial picture looking? What do you think the prospects are for your business and for the economy? Send your thoughts to [email protected].

Posted by Lee Pender on September 24, 2009