Leading distributor of Information Technology (IT), Ingram Micro Inc. (IM) recently announced the addition of two new technology divisions within its U.S. operations. The new units will strengthen the company’s value chain and benefit its channel partners.
 
The two new divisions, namely Advanced Technology and Advanced Computing Divisions, will deliver value-based and specialized opportunities to channel partners in the U.S., thereby helping them to profit more from the developing business prospects.
 
The Advanced Technology Division will support the development of upgraded networking, security and communication solutions. The Advanced Computing Division will focus on the growth of computing and infrastructure technology solutions including enterprise software, storage and virtualization.
 
We believe that Ingram Micro will be able to tap emerging opportunities in the fields of networking and security solutions, which will be supported by the Advanced Technology division. Moreover, with the help of the Advanced Computing division, Ingram Micro will be benefited by opportunities in enterprise software, storage and virtualization markets.
 
Ingram Micro aims at strengthening its service delivery model to meet the increasingly complex business needs through the new divisions. Moreover, Ingram Micro has invested in its core business in an attempt to reduce complexities in IT vendor order management processes.
 
We believe that Ingram Micro’s foray into IT related solutions will generate a steady stream of revenue. Ingram Micro is dependent on the strength in technology spending, which is expected to moderate over the next few quarters, being affected by softening consumer demand. However, we remain positive about corporate IT spending, which should see a slow but steady recovery through the rest of the year and into 2011 and mitigate the negative effects of consumer spending.
 
This revival in IT spending, PC sales and server growth will result in increasing demand for software products, thereby leading to increased utilization of distribution channels and consequently more business opportunities for Ingram.
 
Currently, we have a short-term Buy rating on Ingram Micro, which equates to a Zacks # 2 Rank.
 
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