For the large majority of the publicly traded business-to-business merchants tracked by Multichannel Merchant, 2006 ended on a high note, with solid fourth-quarter top-line and bottom-line gains.
Year-over-year sales rose for all but one of the 13 companies, Deluxe Corp., which saw its revenue slip by just 1%. Sellers of computer products in particular benefited from the continuing strong sales of notebook computers, says Stuart Rose, managing director for Wellesley, MA-based investment bank Tully & Holland.
Nearly as much good news was found on the bottom line. All but three companies — Black Box Corp., CDW Computer Centers, and Wayside Technology Group — reported year-over-year increases. And all but one of the companies, athletic equipment merchant Collegiate Pacific, ended the quarter in the black.
Sales up, income down for Black Box
Quarter ended: Dec. 30 The facts: Networking products and services provider Black Box saw revenue rise 45%, to $264.8 million. This was due largely to its April 2006 acquisition of services provider NextiraOne North America, which has annual sales of roughly $270 million. But Black Box’s net income fell 15%, from $12.5 million for the fourth quarter of 2005 to $10.5 million. The skinny: As of mid-March, the Lawrence, PA-based company faced delisting from the Nasdaq because of delayed filing of its 10-Q report. Until the Nasdaq panel makes a decision, Black Box will continue to be traded on the Nasdaq Global Select Market.
PC “connects” in the quarter
Quarter ended: Dec. 31 The facts: Merrimack, NH-based PC Connection set a quarterly revenue record of $431.9 million, which was an 8% rise over the previous fourth-quarter sales of $398.6 million. That growth was far outpaced by that on the other side of the ledger, however: Net income soared from a scant $11,000 for the fourth quarter of 2005 to $4.6 million. The skinny: An influx of large-account customers and increased sales from the public sector had much to do with PC Connection’s strong performance. The computer reseller also increased gross profits in all segments as it tightened up its procurement process and refocused its sales efforts in the software and service areas.
Wayside Technology straddles a seesaw
Quarter ended: Dec. 31 The facts: Fourth-quarter sales at Wayside Technology Group, a provider of software for engineers and other computer professionals, increased 35% to $56.8 million, up from $42.0 million. The rapid revenue growth of its Lifeboat Distribution wholesale division — 60% year over year — was the main driver, even as sales in the Programmer’s Paradise reseller division fell. But the bottom line took a hit, with net income tumbling 34%, to less than $1.1 million from $1.6 million the previous fourth quarter, due to the elimination of a deferred income tax valuation allowance in 2005. The skinny: Shrewsbury, NJ-based Wayside cut direct sales costs within the Programmer’s Paradise sector by 20%, but it reallocated the funds to Lifeboat and the newly formed TechXtend division, which provides software and hardware installation services. Wayside’s emphasis on wholesale distribution led to lower gross profit as a percentage of sales, since distribution margins are typically lower than reseller margins. (For more on Wayside’s recent initiatives, see “Paradise found” in the July 2006 of Multichannel Merchant or online at www.MultichannelMerchant.com.)
|Company||4Q REVENUE||4Q NET INCOME (LOSS)|
|12 months prior||Current quarter||Increase (decrease)||12 months prior||Current quarter||Increase (decrease)|
|Black Box Corp.||$182,135||$264,806||45%||$12,511||$10,575||(15%)|
|CDW Computer Centers||1,606,964||1,823,929||14%||70,510||53,557||(24%)|
|Note: NM = not meaningful Source: Tully & Holland|