PC Connection 2013 sales, income rise

Despite a 23 percent cut in sales to the federal government

February 3, 2014

Bob Sanders,

PC Connection is reporting an increase its 2013 sales and profits despite a sharp cut in purchases by the federal government, its largest customer.

The Merrimack-based firm reported annual sales grew by nearly 3 percent to $2.2 billion for the year, just short of a 3 percent increase, with profits of $35.7 million, an increase of nearly 8 percent, despite a 23 percent decrease in sales to Uncle Sam, which accounts for 6 percent of the company’s budget.

Figures for the fourth quarter of 2013 were slightly better: Revenue rose 4 percent to $579 million, and quarterly net income was $9.8 billion, a 10 percent increase.

“Note that we continue to experience unfavorable headwinds due to constrained federal spending as we had double-digit percentage decreases in our federal business in all four quarters of 2013,” said chief financial officer Joseph S. Driscoll, according to a transcript provided by SeekingAlpha.com.

Driscoll added that “sales to the federal government are expected to continue to be under pressure for, at least, the first half of 2014.”

Federal cutbacks fueled a 3.6 percent decrease in the company’s public sector segment overall, overwhelming a 17 percent increase in state and educational spending.

In the private market, large accounts amounted to $218 million in sales, a 7.8 percent increase, while small business sales went up nearly 5 percent, to $228.5 million.

The biggest boost was in software, up 14 percent, and networking and mobile products, up 9 percent. Sales of notebooks and tablets, which account for nearly a fifth of all sales, wee up 4 percent.

PC Connection started out as a direct mail company, primarily selling personal computers to individuals. But it is now focused on selling technology to businesses and institutions that are increasingly relying on networking, mobile applications and the cloud — partly because of higher margins, and partly because that is the fastest-growing segment in the sector.