No more excuses. Now that IT product distributor Tech Data
If you're not familiar with the company, let me point out that it operates in an extremely low-margin business. Tech Data and rivals like Ingram Micro
That's why the completion of that two-year restructuring project is so important: Not only does the company get to reap the operational benefits of this belt-tightening move now, but it also no longer has to pay for the process. This quarter, $8.9 million was earmarked for the EMEA changes, bringing the total restructuring cost to almost $55 million over the past six quarters. That's a heavy load for a company that made a net profit of $32.6 million over the past year, including the restructuring cost but excluding a $155 million goodwill impairment charge in the previous quarter.
Computer system builders like Dell
An investment in businesses like Ingram Micro, Gateway, or Tech Data, then, is a vote of confidence in the management team. Tech Data pushed $21 billion worth of high-tech commodities through its systems over the past year. But a hardware distributor doesn't get to skim much off the top of each order, and the challenge is to make the operation run with as little friction as possible. Again, any small improvement stands to bring in huge benefits.
For further Foolishness:
- Turbocharge your portfolio with a few Speed Demons
- Or go the other way with Margin Hogs
- The Tech Data Tango: Fool by Numbers
Fool contributor Anders Bylund holds no position in any of the companies discussed here, though Clearwater-based Tech Data lives right in his backyard. You can check out Anders' holdings if you like, and Foolish disclosure is always close at hand.