Converge, Inc.

Arrow Electronics knows its target market. The company is a leading global distributor of electronic components and computer products, alongside rival Avnet. It sells semiconductors, passive components, interconnect products, and computer peripherals to more than 100,000 equipment manufacturers and commercial customers. Arrow also provides value-added services, such as materials planning, design and engineering, inventory management, and contract manufacturing. It distributes products made by such manufacturers as  IBMPanasonicMicrosoft, and Intel. The company operates from some 460 locations across the globe (serving some 85 countries); about half of its sales comes from the Americas.

Operations

Arrow operates in two segments -- electronic components and Enterprise Computing Solutions (ECS). The larger division, electronic components, accounts for about two-thirds of sales. Its product offerings consist of semiconductors; passive, electro-mechanical, and interconnect products, such as capacitors, resistors, potentiometers, power supplies, relays, switches, and connectors; and computing and memory products. Most of its customers' orders are too large or too frequent to be available via a direct purchase from the manufacturer.

Its Enterprise Computing Solutions (ECS) business -- which sells hardware, software, storage, and security products to value-added resellers -- makes up about a third of sales. ECS has added professional consulting, cloud computing, managed services, and technical training as the business unit expands its support for resellers and systems integrators beyond hardware sales.

Geographic Reach

The company generates 52% of sales from the Americas (mostly the US), with Europe, the Middle East, and Africa (EMEA) and the Asia-Pacific region contributing 29% and 19%, respectively.

Altogether, Arrow has 300 sales offices and 38 distribution centers in 58 countries worldwide.

Sales and Marketing

Arrow serves more than 100,000 OEMs and contract manufacturers through its components business segment and value-added resellers through its ECS business segment. Most of its sales are made on an order-by-order basis, rather than through long-term sales contracts.

Industries served include aerospace and defense, computers, gaming, industrial equipment, instrumentation, medical and scientific devices, networking, optoelectronics, and telecommunications equipment.

Financial Performance

Overall sales grew 5% in 2013 to $21 billion, driven primarily by increased sales in the ECS segment due to growth in software, storage, services, and industry standard servers. Profits, however, fell 21% to $399 million as the company spent an addition $45 million in 2013 on restructuring charges related to the elimination of almost 1,200 positions and vacating about 40 facilities in an effort to streamline operations and reduce real estate costs.

Mergers & Acquisitions

Arrow continues to expand its service capabilities and global presence, primarily through acquisitions. In 2013 it bought five companies, the largest of which is ComputerLinks, a European distributor, for $313 million. It paid a total of $80 million for four smaller acquisitions.

In 2012 it made seven acquisitions, including three focused on electronics asset distribution services: Texas-based TechTurn, Asset Recovery Corporation, and Redemtech. Also in 2012 Arrow bought value-added distributor, ALTIMATE Group, a subsidiary of DCC plc that sells enterprise and midrange computing products and services. Intended to bolster Arrow's presence in Europe, ALTIMATE operates in eight countries in the region, including France, Spain, the Netherlands, and the UK. It also acquired Beijing-based Seed International's distribution business that year to gain greater access to the Chinese market. A specialist in digital signal processing technology, Seed distributes and services embedded computing products mostly made by Texas Instruments.

In 2011 Arrow made two significant purchases in its components segment. The company bought Nu Horizons Electronics, an electronic components distributor with sales offices and regional logistics centers around the world, boosting its custom logistics and life-cycle services for OEM customers and expanding its presence in the Asia/Pacific region. The acquisition of the RF, Wireless and Power Division (RFPD) of Richardson Electronics extended Arrow's presence in the wireless and power conversion markets and added expertise in radio-frequency (RF) design and engineering.

In a smaller 2011 acquisition, Arrow bought Cross Telecom, a provider of telecommunications integration and managed services specializing in VoIP (voice over Internet Protocol) and unified communications. The company also expanded its reach in Japan with the purchase of Chip One Stop, which supplies electronic components to design engineers in that country.

Strategy

Along with rival Avnet, Arrow is highly acquisitive in order to consolidate competition, grow its footprint, and increase product offerings. The company maintains its competitive edge by offering more value-added services to diversify its revenue stream. It also keeps its supplier base large so that customers can procure from a one-stop shop, rather than purchase from several different vendors.

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Converge, Inc.


4 Technology Dr
Peabody, MA 01960-7907
Phone: 1 (978) 538-8000
www.arrow.com

STATS


  • Employer Type: Unknown

Major Office Locations

  • Peabody, MA

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