Channel News

Tech Data Boosts Profits, Inks Deal With NEC<@VM>Bell Mircroproducts To Sell Unbranded Computers<@VM>Axent Adds European Flavor to Channel Push

— Richard McCaffery

Tech Data Corp. of Clearwater, Fla., posted record sales and earnings for the quarter that ended Oct. 31.

Sales for the quarter jumped 62 percent to $3.2 billion, compared to $2 billion from the year-earlier period. Net income rose 44 percent to $34 million, or 63 cents a share.

The company beat analysts' estimates by one cent a share, according to Zacks Investment Research Inc.

Company officials attributed growth in part to an increase in international sales. Tech Data bought Computer 2000 AG of Munich, Germany, in July, expanding its European presence. International business accounted for 50 percent of sales in the third quarter, compared with 23 percent last year.

Sales for the first nine months of 1998 grew 55 percent to $7.7 billion. Net income increased 46 percent to $93 million.

In other news, Tech Data has reached an agreement with NEC Computer Systems, a division of Packard Bell NEC Inc. of Sacramento, Calif., to distribute its computers.

Last summer, NEC Computer Systems canceled its partnerships with distributors to pursue a direct sales strategy a la Dell Computer Corp. That strategy failed.

Now the company is scrapping the direct sales model to broaden its coverage in the United States.
Bell Microproducts Inc. of San Jose, Calif., plans to begin selling unbranded computers to government and commercial resellers during the first quarter.

The plan is part of Bell's strategy to increase its value to resellers by offering more products and services. Many government integrators are looking to outsource manufacturing operations to distributors like Bell. This allows them to better compete with each other and direct-sales computer companies like Dell Computer Corp.

Unbranded computers are computers without a manufacturer's brand name, allowing resellers to put their own name on them. Distributor giants Ingram Micro Inc. and Tech Data Corp. recently announced plans to sell and warranty unbranded boxes.

Bell, which bought the computer products division of Almo Corp. for $20.3 million earlier this year, will use Almo's plant in Philadelphia to assemble the computers. Bell also plans to start manufacturing servers and a complete line of computer systems using Almo's Trademark brand name.

Bell Microproducts sells products from more than 70 manufacturers to commercial and government resellers. The company reported record revenue of $176 million for the quarter that ended Sept. 30, up from $138 million during the same period last year. Net income was $2.1 million, up from $533,000 the year before.
Axent Technologies Inc. of Rockville, Md., is looking to increase its channel sales in Europe.

Since 1996, the maker of security software for commercial and government customers has increased its overall channel sales from 9 percent to 50 percent. The company expected 1998 sales of $100 million. In 1997, international business accounted for 23 percent of Axent's sales.

The company acquired partnerships with 90 distributors and resellers through its purchase of AssureNet Pathways Inc. in March 1997.

So far, much of Axent's focus has been on increasing its channel sales in the United States, but now the company plans to increase its distribution capabilities in Europe.

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