Stock Focus: Electronics Distributors
Arik Hesseldahl, Forbes.com, 03.21.01, 8:51 AM ET
NEW YORK - When there's a turnaround in the fortunes of the semiconductors industry, you'll probably see first evidence of it among electronics distributors.
PC makers get their parts--such as processors, memory, and miscellaneous capacitors and resistors--from distributors like Arrow Electronics (nyse: ARW - news - people) and Avnet (nyse: AVT - news - people). Together, the two companies control over 50% of the North American electronics distribution market.
"These stocks are among the first ones that will rally in a market upturn," says analyst Robert Damron of Tucker Anthony Sutro Capital Markets. Damron thinks that distributors will weather the electronics industry downturn better than companies such as Intel (nasdaq: INTC - news - people) and Compaq Computer (nyse: CPQ - news - people).
Arrow, the biggest distributor, finished last year with nearly $358 million in profits on revenue of $12.9 billion. Arrow benefited from the tight supply of components, which plagued the semiconductors and electronics equipment sectors through most of last year, and from large acquisitions made over the last two years.
The second-largest player, Avnet, finished its most recent fiscal year (on June 30, 2000) with a $145 million profit on sales of $9.1 billion. In its most recent quarter, which ended in December, Avnet recorded a profit of $72 million on sales of $3.4 billion.
Arik Hesseldahl, Forbes.com, 03.21.01, 8:51 AM ET
NEW YORK - When there's a turnaround in the fortunes of the semiconductors industry, you'll probably see first evidence of it among electronics distributors.
PC makers get their parts--such as processors, memory, and miscellaneous capacitors and resistors--from distributors like Arrow Electronics (nyse: ARW - news - people) and Avnet (nyse: AVT - news - people). Together, the two companies control over 50% of the North American electronics distribution market.
"These stocks are among the first ones that will rally in a market upturn," says analyst Robert Damron of Tucker Anthony Sutro Capital Markets. Damron thinks that distributors will weather the electronics industry downturn better than companies such as Intel (nasdaq: INTC - news - people) and Compaq Computer (nyse: CPQ - news - people).
Arrow, the biggest distributor, finished last year with nearly $358 million in profits on revenue of $12.9 billion. Arrow benefited from the tight supply of components, which plagued the semiconductors and electronics equipment sectors through most of last year, and from large acquisitions made over the last two years.
The second-largest player, Avnet, finished its most recent fiscal year (on June 30, 2000) with a $145 million profit on sales of $9.1 billion. In its most recent quarter, which ended in December, Avnet recorded a profit of $72 million on sales of $3.4 billion.
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