Avnet's new acting CEO has started the clock ticking on a corporate turnaround – after he talked up ideas to overhaul a business that has disappointed Wall Street's moneymen.
Former Lenovo boss Bill Amelio – who’s been on Avnet’s board for the past two years – was made interim chief in July, and last night fronted his maiden conference call to discuss fiscal 2016 numbers and wider plans.
“One of my first priorities will be focusing on execution,” he told financial analysts. “We have not performed to your expectations or our full potential”.
He said Avnet runs the business with 25 P&L accounts globally and needed to make more of its scale, and reviews operations monthly to identify the “profit generators” and the “profit leakers.”
“I’m working on installing a business management system that will emphasis accountability and address organisational barriers that will allow us to use our collective operating groups to work more effectively,” Amelio explained.
He added a “greater sense of urgency” will also be instilled in the teams, but didn’t say how he’ll do that or why this trait isn’t already more widely prevalent.
In the past twelve months, sales fell to $26.2bn, down from $27.92bn in the previous financial year, and operating profit slipped by $40m to $787.6m.
Avnet, which sells data centre kit and increasingly more software and services as a proportion of the total mix, is trying to break into the cloud aggregation game like many of its rivals.
Amelio said it is “imperative” the business makes “steady progress,” and when that “stalls we must quickly correct course to show that we have the right people and adequate resources to win.”
Talent development will be revisited: “We will build a stronger bench for the future,” he promised, adding that “many skilled” staffers will be encouraged to “develop leadership capabilities” in areas “critical to Avnet’s future”.
Avnet revealed last month it has has assembled 450 sales specialists globally to give the hard sell on cloud, cognitive computing, data analytics, the Internet of Things, mobility, security and enterprise networking. Demand in other traditional sectors such as legacy data centre continues to dwindle.
The US-headquartered distributor revealed it's sitting on $600m of cash offshore, however repatriating this would be costly from a tax perspective. More acquisitions are inevitable but not likely until the £800m-plus deal (the enterprise value) for Premier Farnell has concluded.
Amelia said an executive-level tour-of-duty of the regional divisions is set, and on the back of this he’ll devise some “growth strategies, resource allocation and the metrics we will use to measure our progress.”
Amelio, who replaced Rick Hamada on July 11, assumes he is the “front runner” to get the CEO position full-time: “The board, of course, has their fiduciary responsibility to make sure that we do a credible search and to make sure that we do a credible search, we leave no stone unturned.”
It is always easier to blame a predecessor for a business’s shortcoming, but all eyes will now be fixed on the vital statistics at Avnet under the guidance of Amelio. ®