What happened
Shares of SYNNEX (SNX 1.73%) jumped on Friday after the business process services specialist reported its fourth-quarter results and announced plans to split into two publicly traded companies. As of 12:10 p.m. EST, the stock was up 12.6%.
So what
SYNNEX reported fourth-quarter revenue of $6.58 billion, up 18.7% year over year and $590 million higher than the average analyst estimate. Technology solutions revenue rose 17.4% to $5.4 billion, while Concentrix revenue jumped 24.7% to $1.2 billion. The Concentrix growth was mostly due to the acquisition of Convergys.
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Non-GAAP earnings per share came in at $4.26, up from $3.69 in the prior-year period and $0.65 higher than analysts were expecting. Adjusted operating margin rose 31 basis points to 5.14%.
In addition to reporting its results, SYNNEX announced plans to split itself in two. SYNNEX Technology Solutions will have roughly $19 billion in annual revenue, making it a top IT distribution company in the Americas and Japan. Concentrix will have $4.7 billion in annual revenue, focusing on providing "technology-infused" customer experience solutions.
The split is expected to qualify as a tax-free transaction for federal income tax purposes. When the transaction closes in the second half of 2020, SYNNEX shareholders will own shares of both new companies.
Now what
"The spin-off will provide each company with sharper strategic and managerial focus and enable SYNNEX shareholders to own and value each business separately," said SYNNEX President and CEO Dennis Polk. In the near term, SYNNEX expects to produce first-quarter revenue between $5.24 billion and $5.54 billion, along with non-GAAP earnings per share between $3.03 and $3.22.
With Friday's gain, shares of SYNNEX are now up about 71% over the past year.
