You won't see a store on every street corner, but PC Connection is just a click away. A leading direct marketer of computer products in the US, the company sells hardware, software, networking devices, and peripherals. It offers more than 300,000 items from manufacturers such as Apple, Hewlett-Packard, and Microsoft. PC Connection also provides a range of IT services. Through its catalogs, websites, and direct sales force, PC Connection targets small and midsized businesses, large corporations, government agencies, and educational institutions, as well as individual consumers. PC Connection was founded in 1982 by Patricia Gallup (chairman and CEO) and David Hall (director).
Business at PC Connection is looking up as the economy recovers. The US recession and global economic downturn led to an overall slump in spending on information technology products, which resulted in lower sales for PC Connection in recent years. The company's sales dropped to nearly $1.6 billion in 2009. Demand rebounded in 2010 -- with the greatest growth coming from corporate customers -- enabling the company to post nearly $2 billion in sales, a 25% improvement. Also in 2010 PC Connection saw its profits rise to nearly $23 million, reversing a $1 million loss from 2009. (The loss was largely the result of an $11 million write-off for a proprietary software system.) To reboot its bottom line, the company reduced the size of its workforce and implemented other cuts that yielded $14 million in savings.
Small and midsized businesses (SMB) are PC Connection's largest customer segment, typically accounting for more than 40% of sales. SMB customers are served by the company's PC Connection Sales subsidiary. Large corporate accounts, handled by PC Connection's MoreDirect subsidiary, generate about 30% of revenues. Public sector customers (including government agencies and educational institutions) contribute about 25% of sales and are served by PC Connection's GovConnection subsidiary. The PC Connection Express subsidiary handles orders from individual consumers and home office customers, which account for roughly 5% of sales.
PC Connection has focused on maintaining strong customer relations by providing good service. About 90% of sales are made to repeat customers each year. Most of its revenue (roughly 70%) is generated through telemarketing and field sales, while the balance comes from its owned websites.
Looking beyond hardware and software sales, PC Connection is emphasizing service offerings that are geared to business customers. Its ProConnection services division helps companies with IT lifecycle management, software services, and optimizing servers, storage, and networks. In early 2011 PC Connection added to its services division when it acquired ValCom Technology for $11 million. ValCom similarly provides software services, storage and network oversight, and IT lifecycle management, as well as a staffing division that hires out technology consultants. ValCom continues to operate from its Illinois offices.
CEO Gallup and director Hall each control about a third of the company's shares.
▲ Show Less▼ Show Full Description