thread:
those of you in pios can you post and let me know?
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October 18, 1999, Issue: 1182
Section: Special Report: Best-Managed Companies
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Distribution -- Runners-Up
Arrow Electronics Inc.
Arrow Electronics Inc. is the type of company that charts a course and sticks to it, even when the industry turns the other way.
"Someone once said we have strategy and courage," said Stephen P. Kaufman, chairman and chief executive. "We've had a strategy from the very beginning to not just be buffeted by the winds of the industry, and the courage to have a different strategy."
Kaufman claims Arrow was years ahead of competitors in implementing an online real-time computer system, centralizing its warehousing and purchasing operations, and making overseas acquisitions.
Observers say Arrow's global outlook reflects its executive team. By drawing on the experience of professional managers, and not necessarily distribution-industry veterans, Arrow maintains a fresh view that often challenges conventional wisdom, analysts say.
But the company is not immune to the industry's cycles. A recent downturn battered Arrow's bottom line and forced deep cost cutting. The consolidation of its many acquisitions has helped Arrow lower selling, general and administrative expenses from 11.3% of sales in 1993 to a projected 9.3% this year, said Rob Damron, an analyst at Tucker Anthony Cleary Gull Inc., Milwaukee.
A massive restructuring early last year was aimed at reducing costs, but unstable industry conditions have so far masked the bottom-line benefits, according to analysts.
In the first half of 1999, Arrow's sales reached $4.5 billion, while net income was $43.4 million, which included charges in connection with the January acquisitions of Bell Industries' Electronic Components Division and Richey Electronics. -Crista Souza
Melville, N.Y.
www.arrow.com
Sales:
1998: $8.3 billion
1997: $7.8 billion
Net income:
1998: $145.8 million
1997: $163.7 million
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Avnet Inc.
Avnet Inc. continually looks for ways to break away from the pack and offer customers better value, whether through value-added services, supply-chain management programs, e-commerce, or a global IT infrastructure.
Doing this and making a profit hasn't been easy. "Margins have been seriously challenged in the last three years, and the [distribution] environment has been highly competitive," said Roy Vallee, chairman and chief executive.
Compared with its competitors' performance in market-share and earnings growth as well as return on capital, Avnet fared well through the industry's down cycle, and even managed to keep operating margins from eroding further in its most recent quarter, according to Vallee and market analysts.
"My goal is for our organization to outperform our peers in the up market like we did in the down market," Vallee said.
Last year, Avnet streamlined its interface to suppliers and customers and dramatically reduced sales, general and administrative costs.
By quickly integrating newly acquired Marshall Industries, SEI/Eurotronics, and SEI/Macro, Avnet will realize additional savings in overhead of approximately $90 million, said Rob Damron, an analyst at Tucker Anthony Cleary Gull Inc. in Milwaukee.
"That's very impressive," Damron said. When top-line growth and gross margins return to healthier levels, "the savings from restructuring will really become apparent."
In additition, Avnet recently forged an alliance with British catalog house Eurocomponents plc, which in July had purchased Avnet's Allied Electronics catalog business. -C.S.
Phoenix
www.avnet.com
Sales:
Fiscal 1999: $6.35 billion
Fiscal 1998: $5.92 billion
Net income:
Fiscal 1999: $174.5 million
Fiscal 1998: $151.4 million
Fiscal 1999 ended July 2
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Nu Horizons Electronics Corp.
At a time when several of its competitors have been beefing up their line cards, Nu Horizons Electronics Corp. has been carefully trimming and honing, focusing on a select group of semiconductor specialists. The company now represents 25 suppliers, down from a high of 52.
The move to specialization, which chairman Irving Lubman and chief executive Arthur Nadata began implementing about three years ago, appears to be paying off in a big way for this midsize distributor. Second-quarter sales hit a record $88.9 million, a 41.5% increase from last year's $62.8 million. And net income grew to $2.2 million during the quarter, from $1.2 million in the year-ago period.
As top-tier distributors went on an expansion tear by acquiring several small competitors, Nu Horizons saw the need to specialize, according to Nadata. "We've had to take a different direction than the big guys," he said. "We wanted to focus on fewer suppliers, but to be the best trained in the technologies that target the customer bases that we're going after."
With suppliers such as STMicroelectronics and Xilinx Inc., Nu Horizons is emphasizing proprietary products.
What's missing? "We would love to have a major DSP line," Nadata said.
What also differentiates Nu Horizons from other component distributors is that it participates in two other businesses: The company runs a small contract manufacturer, and it owns NIC Components Corp., a rapidly growing passive-component supplier that represents 20% of Nu Horizons' overall sales. -Matthew Sheerin
Melville, N.Y.
www.nuhorizons.com
Sales:
Fiscal 1999: $253.9 million
Fiscal 1998: $233.3 million
Net income:
1999: $4.5 million
1998: $5.3 million
Fiscal 1999 ended Feb. 28
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Pioneer-Standard Electronics Inc.
Through an extended period of lackluster performance by the channel's publicly traded players, Pioneer-Standard Electronics Inc. has consistently outperformed its peers, said one industry analyst.
A lean operating structure has enabled Pioneer to contain costs faster than its operating-profit margin has eroded, according to Rob Damron, an analyst with Tucker Anthony Cleary Gull Inc., Milwaukee.
Pioneer's operating-profit margin bottomed out in June 1998, but that didn't happen at Arrow until March 1999, Damron said. He expects Avnet's operating margin to reach its low in the September quarter.
Additionally, Pioneer's nearly 50-50 balance of components and computer systems has helped the company weather the recent component down cycle better than most, Damron explained. "This balance has given them a more predictable revenue stream, in that when one market segment was weak, the other was generally stronger and vice versa," he said.
Under the management of chairman and chief executive James Bayman, Pioneer has made substantial progress on the global front. The company has gained access to new multinational customers through its global alliances with Europe's Eurodis and Taiwan's World Peace International.
Pioneer fares well on the asset-management score card. The company's inventory turnover rate averages just under six turns per year, and annual sales per employee are approximately $900,000, Bayman said. The company is aiming for $1 million in sales per employee. -Barbara Jorgensen
Cleveland
www.pioneerstandard.com
Sales:
Fiscal 1999: $2.26 billion
Fiscal 1998: $1.69 billion
Net income:
Fiscal 1999: $30.8 million
Fiscal 1998: $30.5 million
Fiscal 1999 ended March 31 |
