Ingram Expands Digital Signage - Analyst Blog
June 13 2012 - 5:15AM
Zacks
Ingram Micro Inc.
(IM) adds to its portfolio every now and then. After announcing a
bunch of cloud offerings last week, the information technology (IT)
distributor has now expanded its range of digital signage offerings
through a new distributor agreement with multi-media software
solutions provider Scala Inc. Financial terms of the deal were not
mentioned.
Pennsylvania-based Scala’s software
suites are broadly used in digital signage, interactive video, TV,
presentations, streaming TV into large LAN and WAN, and other
communications media. Its digital signage solutions are used by big
shots such as McDonald's Corp. (MCD), Warner
Bros., Royal Dutch Shell (RDS), Esso, Ericsson and Bloomberg
Television.
Per the agreement, Ingram will deal
in Scala’s entire range of digital signage and display solutions.
The IT solutions provider will market and provide technical support
to Scala’s products like Scala Designer, Scala Content Manager and
Scala Quick Start.
The need for digital signage is
increasing across the world. It is one of the cheapest ways of
delivering content or messages electronically via different media.
Digital signage solutions generate recurring revenue streams, which
actually lure distributors to win the dealership. Research firm IHS
ISuppli has projected a growth of 12.6% in the signage and
professional displays market this year. Moreover, the firm predicts
worldwide shipment of roughly 17.3 million units in 2012, up from
15.4 million units and 13.5 million units in 2011 and 2010,
respectively.
The tie-up with Ingram will open
opportunities for Scala in the U.S. market. Also, Ingram will be
able to witness continued revenue streams through the growing
demand for digital signage solutions.
Ingram is one of the biggest
players in the IT distribution business. The company’s geographical
diversity makes it a logical choice for manufacturers seeking to
increase their international exposure. The channel partners also
get exposure to various technology providers’ offerings under one
roof. Moreover, Ingram’s continuous product enhancement and partner
addition activities will keep it ahead of peers such as
Avnet Inc. (AVT), Arrow Electronics
Inc. (ARW) and Tech Data Corp.
(TECD).
We find Ingram Micro’s first
quarter results impressive as the bottom line was well ahead of the
Zacks Consensus Estimate. The company has provided a positive but
cautious second quarter guidance. But we believe that support from
its Australian venture and the improving IT spending trend will
help Ingram post better results going forward.
We remain fairly optimistic about
Ingram Micro’s strategic relationship with network giant
Juniper Networks Inc. (JNPR), as well as tech
giants such as Hewlett-Packard Company (HPQ),
IBM Corp. (IBM) and Microsoft
Corp. (MSFT).
The company’s growing SMB exposure
and improving profitability is encouraging, but its significant
European exposure and debt burden are concerns.
Currently, Ingram Micro has a Zacks
#3 Rank, implying a short-term Hold rating.
ARROW ELECTRONI (ARW): Free Stock Analysis Report
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INTL BUS MACH (IBM): Free Stock Analysis Report
INGRAM MICRO (IM): Free Stock Analysis Report
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