Avnet Inc. (AVT) recently completed its acquisition of Pinnacle Data Systems Inc. (PDSi). PDSi provides application-specific hardware and global support solutions for the world’s largest Original Equipment Manufacturers (OEMs).

PDSi generated revenues of approximately $29 million and the acquisition is expected to be immediately accretive to earnings, supporting Avnet’s return on capital target of 12.5%.

Once integrated, PDSi will become a part of Avnet Integrated Resources, which provides reverse logistics and after-market services to the global technology industry.

The acquisition is another step in the company’s strategy to offer a new after-market services business, which focuses on repair, refurbishment, recycling and responsible disposition of IT products.

Last week, Avnet reported a net income of $147.0 million or $0.98 per diluted share in the second quarter of fiscal 2012 compared with a net income of $139.0 million or $0.90 per share in the first quarter of fiscal 2012 and a net income of $141.0 million or $0.91 in the year-ago quarter. The reported net income not only missed the Zacks Consensus Estimate but also failed to fall within management’s guidance range of $1.01 – $1.09.

Sales came in at $6,693.6 million, down 1.1% from a year-ago, but up 4.2% sequentially. Pro forma revenue (excluding acquisitions/divestitures) declined 5% in constant currency at EMEA but rose 14% in Asia. Revenues were within management’s guidance range of $6.45 billion and $7.15 billion.

We continue to maintain a Neutral recommendation on Avnet Inc. However, we have a Zacks #2 Rank, which translates into a short-term Buy rating.

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