Arrow Electronics boss Mike Long could not have enunciated his message any clearer in a conference call with analysts to discuss the distributor’s Q2 financial results (none too shabby – sales up 2%, income up 8%).
Arrow and Avnet are on different strategic routes and as far as Long is concerned, Arrow is on a winning streak, its design win strategy is paying off, supplying the Internet of Things (IoT) market could represent 40 to 50% of the distributor’s business over the next five
And in a sideswipe at Avnet following the defenestration of CEO Rick Hamada, and replacement by an interim CEO, he noted that Arrow had its management succession planning in order and that it has completed the orderly transition of several key leadership roles over the past two years.
The progress on engaging with design engineers is most striking. Answering a question from Matt Sheering of investment bank Stifel, Long said that Arrow had completed 75,000 design wins in the second quarter of this financial year compared with 69,000 in Q2 2015.
The prime meeting point between Arrow and the engineering community has been the Internet media portfolio acquired over the past two years – firstly Hearst’s Technical Publishing division, and latterly UBM’s electronics publishing assets. “It is enabling Arrow to engage with even more engineers online,” said Long.
Avnet’s ploy to huddle up with more engineers is the stimulus behind its proposed acquisition of Premier Farnell.
Long says Arrow ran the rule over Premier Farnell last year and took a rain check.
Long just saw what he called as “too much heavy lifting” in a potential acquisition of the UK-based distributor, citing the sizeable industrial distribution business – in which Arrow has no interest – as one factor.
He described using the media approach to educate engineers in their designs picking out IoT and the Cloud as two technologies where Arrow is gaining traction and bringing its component and computer business to work together for the customers benefit.
Brexit has however impacted Arrow. Following the referendum, it is clear some Arrow customers have pushed back orders, a fact confirmed by the UK Purchasing Managers Index indicating British manufacturing fell at its fastest pace for three years.
Long believes this setback is a hiccup.
“It was inevitable when you have that kind of a hiccup that somebody is going to say, oh wait a minute. But then at the end of the day they still need that computing power in their data centre. So they are going to spend the money, whether they like it or not and I think that’s the situation here also,” he commented.
For the full text of the analysts call go to http://seekingalpha.com/article/3994808-arrow-electronics-arw-ceo-mike-long-q2-2016-results-earnings-call-transcript?page=11