Earlier this week, Arrow Electronics Inc. (ARW) announced its decision to open custom computer system integration fulfillment facilities in Brazil and India. The new facilities shall provide advanced original equipment manufacturing (OEM) services, considered to be more economical, technologically advanced, productive and user friendly.
Management expressed its exuberance on the decision to open these integration facilities at San Paulo, Brazil and Bangalore, India, by averring that market proliferation strategies have been of primary importance to the company and are implemented with the intent of satisfying its customer needs across the globe.
Arrow has been proactive with regard to its market expansion advancements. These new locations will add to Arrow's already existing integration facility centers at Arizona, Hungary, China, Israel and Mexico.
Providing optimum value to customers has been an important aspect to Arrow. In early April, the company entered into an agreement with Ocular LCD, Inc. to add the latter's Ocular Crystal's Touch panels to its existing product database in North America.
It is noteworthy that these market expansion strategies have been executed in sectors which are proving to be incipiently profitable for Arrow. In 2011, consolidated sales across the Americas soared 34.2%, whereas the Asia Pacific region recorded sales growth of nearly 18.4%, annually. Hence, it would not be hyperbolic to infer that these current moves shall further abet growth at areas where demand is already escalating for Arrow's products.
Avnet, Inc. (AVT) declared that nearly 68% of its total sales in 2011 accrued from the Americas and Asia Pacific. Hence, Arrow should be on its guard regarding competitors with strong market shares across the regions of its existing and future operations.
The company currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We also maintain a long-term Neutral recommendation on the stock.
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