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About PC Connection, Inc.

You won't see a store on every street corner, but Connection (formerly PC Connection) is just a click away. A leading direct marketer of computer products in the US, the company sells hardware, software, networking devices, services, and peripherals. It offers more than 300,000 items from manufacturers such as Apple, HP Inc., and Microsoft as well as a range of IT services. Through its websites, catalogs, and direct sales force, Connection targets small and midsized businesses, large corporations, government agencies, and educational institutions, as well as individual consumers. The company dropped “PC” from its name in 2016 to reflect its mission of connecting people to technology and its range of products.

Operations

Connection conducts its business operations through three business segments: Small and Midsized Business (SMB), Large Account, and Public Sector.

Connection owns four sales companies, each of which can deliver custom-configured computer systems overnight. SMB typically accounts for more than 40% of sales and SMB customers are served by the Connection Sales subsidiary. Large corporate accounts, handled by Connection's MoreDirect subsidiary, generate about 40% of revenue. Public sector customers (including government agencies and educational institutions) contribute about 20% of sales and are served by Connection's GovConnection subsidiary.

In terms of what’s selling, Notebooks/Mobility products and Software products account for about 20% of sales each, followed by Servers/Storage, about 10% each, and Other Hardware/Services, about 40%.

Geographic Reach

Connection operates through eight locations in addition to its 283,000-square-foot distribution and fulfillment complex in Wilmington, Ohio, and distribution centers in Kenne, Merrimack, and Portsmouth, New Hampshire; Marlborough, Massachusetts; Rockville, Maryland; Dakota Dunes, South Dakota; Boca Raton, Florida; and Itasca, Illinois.

Sales and Marketing

Connection connects with customers through direct marketing channels, including telemarketing and field sales, internet sales through its four e-commerce sites, and inbound telesales. The online retailer spends about $16 million a year on advertising.

Five vendors constitute about 60% of the company's product purchases, including Ingram, about 20%, and Synnex, about 15%. As for manufacturers, HP Inc. products generate about 20% of Connection's revenue.

Financial Performance

Connection's sales increased for the seventh consecutive year in 2016, rising about 5% to about $2.7 billion from 2015 as each of the three segments posted higher numbers. In products, software sales rose with the help of Softmart, acquired in May 2016 and widespread customer focus on notebook/mobility products boosted their sales throughout the segments.

The company’s net income rose 3% to about $48 million in 2016 from 2015 on the higher sales. It maintains a profit margin of about 1.8%.

Cash flow from operations increased to about $33.6 million in 2016 from about $31 million in 2015. In 2016, operating cash flow came from net income before depreciation and amortization and a decrease in inventory.

Strategy

Connection is focused on maintaining strong customer relations by providing good service. The company acquires products for resale both directly from manufacturers and increasingly indirectly through distributors and other sources.

Looking beyond hardware and software sales, 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. The company is even offering services for companies moving their computing resources to the cloud.

Connection seeks to build its presence in vertical markets. It’s carved out a healthy business in healthcare and has added sales teams to focus on retail, finance, and manufacturing verticals.

The company made two acquisitions – Softmart and GlobalServe – in 2016 with which it intends to leverage more international sales.

Mergers and Acquisitions

In 2016 Connection acquired Softmart Inc., a global supplier of information technology and services, for about $32 million in cash. Softmart helps Connection boost its services capabilities, including cloud services, and strengthen its position with Microsoft as a tier-1, direct Cloud Solution Provider (CSP).

Also in 2016 Connection bought GlobalServe, a global IT procurement and service management company, for some $11 in million cash. The deal expands Connection’s capability to service customers on a global scale through its OneSource internet portal with consistent delivery, reporting, pricing, and logistics.

PC Connection, Inc.

730 MILFORD RD
Merrimack, NH 03054-4612
Phone: 1 (603) 683-2000

Stats

Employer Type: Publicly Owned
Stock Symbol: CNXN
Stock Exchange: , NASDAQ
Vice Chairman: Joseph A. Baute
Chairman and Chief Administrative Officer: Patricia Gallup
President and CEO: Timothy J. McGrath
Employees (This Location): 10
Employees (All Locations): 2,513

Major Office Locations

Merrimack, NH

Other Locations

Laguna Niguel, CA
Shelton, CT
Schaumburg, IL
Marlborough, MA
Dover, NH
Keene, NH
Merrimack, NH
Portsmouth, NH
Wilmington, OH
Exton, PA
Dakota Dunes, SD