Disparate processes, regulations muddying government sales, Avnet says

Friday, February 11, 2011

Diverse public sector procurement norms across different Latin American countries are throwing up roadblocks for US IT wholesaler Avnet Technology Solutions (NYSE: AVT), the company's senior VP and general manager for Latin America and the Caribbean, Sergio Farache, told BNamericas.

Avnet has singled out the financial, retail and government sectors as the industries with most potential in Latin America, but it has been challenged in capitalizing on opportunities in the latter segment.

Farache emphasized that Avnet has a second-tier business model that involves selling to partners who then, in turn, sell to end customers.

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"Government is interesting, but there is little standardization between countries," he said. "In other words, each country has its processes and regulations, and consequently it's very difficult to deliver a uniform enablement program [to partners] in order to serve that industry."

The executive pinpointed different acquisition methods as one of the root causes of Avnet's government sector challenges.

"In Latin America, it depends country by country," he said. "There are countries that rely on a model of electronic auctioning. ... Other countries do things through the press. They follow different models at the national level in comparison to the local level. It's difficult to document and help partners understand the different mechanisms in one, uniform way."


Avnet posted double-digit year-over-year revenue growth in Latin America during fiscal 2Q11, which ended January 1, Farache said without providing concrete figures. Software and middleware have driven regional sales, with standout geographies including Mexico, Brazil, Chile and Argentina.

Avnet has also advanced significantly in its incorporation of Latin American IT distributor Tallard Technologies and US IT products wholesaler Bell Microproducts (Nasdaq: BELM). Farache said the firm has wrapped up integration in areas such as offices, warehousing and also regional leadership.

"There was some restructuring that has brought about new hirings and also some personnel departures," he said.

Farache added that the firms will be tying up loose ends during upcoming quarters.

"I think that we still have to work in particular in our go-to-market strategy. In other words, how to maximize the synergies between products," he said. "Now we're working on how we can make the complete product portfolio available to clients in a more simple way."

Globally, Avnet saw second quarter net profits rise 35.8% year-over-year to US$141mn, while sales during the same period advanced 40% to US$6.77bn.