Business service provider Synnex Corp. (SNX), Wednesday reported a decline in profit for the first quarter, as revenues remained flat and costs increased. Moving forward, Synnex detailed a weak outlook for the second quarter. Shares of the company slipped seven percent in after-hours trade following the news.
Fremont, California-based Synnex reported a profit that declined to $33.4 million or $0.88 per share from $38.2 million or $1.02 per share last year. On average, eight analysts polled by Thomson Reuters expected earnings of $0.88 per share for the quarter. Analysts' estimates typically exclude special items.
Synnex provides distribution and business process outsourcing services to resellers, retailers, and original equipment manufacturers. Its services include IT distribution, supply chain management, and contract assembly.
Synnex revenues for the three-month period remained flat with last year at $2.46 billion. Analysts expected revenues of $2.44 billion for the quarter.
Sales from distribution segment, which generates majority of the revenues, was essentially flat for the quarter, while Global Business Services revenues increased 16.5 percent over last year.
Cost of revenues increased to $2.30 billion from $2.29 billion last year. Operating margin decreased to 2.27 percent from 2.60 percent last year.
Looking forward to the second quarter, Synnex expects earnings of $0.78 to $0.82 per share and revenues of $2.43 billion to $2.53 billion. Analysts currently expect earnings of $0.92 per share on revenues of $2.51 billion for the second quarter.
Chief Executive Kevin Murai said, "We anticipate that IT demand will remain mixed for products we sell and geographies we operate in. In addition, ongoing competitive pricing and a more limited ability to earn incremental incentives will impact our gross margin this quarter. Despite the near-term challenges, however, we remain focused on growing our business and expect our margins to improve in the second half of the year."
SNX closed Wednesday's trading at $40.88, up $0.23 or 0.57% on the NYSE. The stock lost $2.90 or 7.09% in after hours trade.
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