Synnex Reports Strong Growth in 2006

Synnex Corp., a global IT supply chain services company, reported financial results for fiscal 2006 this month that included 12.5 percent revenue growth and 29.7 percent growth in net income from continuing operations.

Fremont, Calif.-based Synnex, which is one of Microsoft's handful of authorized distributors in the United States, had revenues of $6.34 billion for the year ended Nov. 30, 2006, up from $5.64 billion for the previous year.

While net income was down slightly, from $52.8 million in fiscal 2005 to $51.3 million in fiscal 2006, net income from continuing operations rose nearly a third from $39.6 million in 2005 to $51.3 million in 2006. The larger net income from 2005 took into account an after-tax gain of more than $12 million from the April 2005 sale of its Japan distribution division, Synnex K.K. to MCJ Company Ltd., a PC build-to-order manufacturer headquartered in Tokyo.

At the time, the company presented the sale as a strategic move to focus on the North American market, where it does more than 95 percent of its business now. The company has distribution, sales and assembly facilities in North America, Asia, Latin America and Europe.

Synnex also reported results for its fourth quarter – revenues were up 9.1 percent to $1.74 billion from $1.59 billion in the year ago quarter. Net income for continuing operations were up 25.7 percent to $15.6 million from $12.4 million.

Robert T. Huang, president and CEO of Synnex, attributed the solid results to continued improvement of Synnex' main distribution businesses, investments in new businesses, a focus on productivity improvements and increased value-added service offerings. "For our fiscal 2007 we will continue to focus our efforts on growing our core distribution operations as well as making additional investments in new businesses to further enhance and diversify our offerings," Huang said in a statement.

For the first quarter of Synnex' fiscal 2007, the company is expecting revenues in the range of $1.57 billion to $1.62 billion and net income in the range of $12.8 million to $13.5 million.

Synnex' two main areas of business saw growth in the fourth quarter. More than 90 percent of Synnex' business comes from distribution of OEM and software publisher products to reseller customers. That portion of the business grew 8.7 percent over the prior year quarter to $1.59 billion. Hewlett-Packard is Synnex' largest single OEM customer, accounting for roughly a quarter of the company's revenues. Among its relationships with software publishers, Synnex is an authorized distributor for the U.S. for Microsoft. Other U.S. authorized distributors for Microsoft are Tech Data, Ingram Micro, Avnet and D&H Distribution.

Synnex also does contract assembly -- Sun Microsystems is the largest customer -- and revenues in that category were up 13.8 percent over the prior year quarter to $144.6 million.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.