People who get IT, shop for it at CDW. The company offers about 100,000 information technology products, including notebook and desktop computers, software, printers, servers, storage devices, networking tools, and accessories, under more than 1,000 brands. Top brands include Adobe, Apple, Cisco, Hewlett-Packard, Microsoft, VMware, among others. CDW operates a retail store at its corporate headquarters and manages an e-commerce site. Almost all of the company's sales come from public-sector clients and private businesses. Founded in 1984 as Computer Discount Warehouse, CDW went public in mid-2013. Private equity firms Madison Dearborn Partners and Providence Equity Partners are its largest shareholders.
CDW was hoping to raise $500 million with its IPO but walked away with $395 million. The computer seller will use the proceeds to service debt, to conclude ties with its owners, and for general corporate services. The company is counting on its recent strong performance (sales are up 25% since 2008) to draw investors to its IPO. This is its second IPO after being in private hands for six years.
CDW has 25 office in the US and two in Canada. It has two distribution centers, one in Illinois and one in Nevada. Canada accounted for 4% of the company's sales in 2013.
CDW has a Toronto-based subsidiary that markets computer products to customers across Canada. CDW Advanced Services, another subsidiary, provides customized engineering services along with hosting and data center services. With growth of overall personal-computer shipments slowing, the services business is CDW's best hope for growth.
Sales and Marketing
The company serves 250,000 small, medium and large business, government, education. and healthcare customers via its own sales force and service delivery teams.
Products made by Hewlett-Packard and Cisco accounted for 20% and 14%, respectively, of the company’s 2013 net sales. The federal government accounted for 7% of CDW's revenues.
Advertising expense increased $1.3 million, or 0.9%, to $130.8 million in 2013, compared to $129.5 million in 2012.
The company has seen a consistent growth in its revenues over the past few years. In 2013 CDW reported a 6% growth in revenues due to an increase in hardware and software sales, a more tenured sales force, a continued focus on seller productivity, and the addition of nearly 120 new customer-facing employees.
Corporate segment net sales in 2013 increased by 8.1% driven by sales growth in the medium/large customer channel primarily due to certain of these customers increasing their IT spending, and as well as improved sales productivity by CDW staff. This increase was led by unit volume growth in netcomm products and a growth in notebooks/mobile devices and software.
Public segment net sales in 2013 increased by 3.5%, driven by a strong performance in the education customer channel.
The company’s net income grew by 12% due to an increase in revenues, and a drop in interest expenses (due to lower debt balances and effective interest rates as a result of debt repayments and refinancing activities).
Operating cash flow increased by $49 million to $366 million in 2013 due to higher net income and higher cash generated from accounts payable/trade.
CDW continues to expand its services footprint in the areas of Managed Services, Professional Services, Partner Services, Configuration Services and Warranty Services. By adding 120 employees, in 2014 the company was able to expand the services teams it had in 25 markets, while adding new markets to its portfolio.
Mergers and Acquisitions
Expanding its footprint, in 2014 the company acquired a 35% non-controlling stake in UK-based IT solutions provider Kelway, which has global supply chain relationships that enable it to conduct business in more than 100 countries.