Arrow Electronics (ARW - Analyst Report) recently announced that its Enterprise Computing Solutions (ECS) segment has signed a distribution agreement with Trend Micro. This will introduce virtualized cloud security solutions to Arrow’s distribution channel database catering to the needs of its comprehensive clientele database.
The venture undertaken is to directly serve Arrow’s mid-market and enterprise customers in order to ameliorate their content-security and threat-management solutions. The company understands that in a world of globalization, where online networking and communication forms the base of all activities, security in digital content transmission for its customers is imperative.
Trend Micro is a leader in providing cloud-based security solutions to its customers. The company enjoys the reputation of being customer-centric with user-friendly products of the highest technology standards.
We believe that this agreement contains two-fold benefits. Not only would the innovative and improved security solutions cater to the needs of Arrow’s data center customers but would also enhance the existing market share and goodwill of Trend Micro’s products, using the high promontory that Arrow currently sits upon with its dominance in the economy.
Recently, during the first week of February, 2012, the company reported its financial results for its final quarter of 2011, whereby it attained a 5% year-over-year revenue increase in its Enterprise Solutions segment, reaching around $2 billion on the back of strong Europe sales. It is quite lucid that this contract would further proliferate this segment for the company, ossifying its command even more in the computing solutions industry.
It should, however, be noted that Arrow resides in quite an ominous monopolistic market where its competitors also set progressive trends. Avnet, Inc. (AVT - Analyst Report) very recently signed a distribution agreement with SMART Storage Systems with the intent of diversifying its product database and also to enhance customer satisfaction.
Hence, Arrow should not become complacent of its strong financial results but continue to make such crucial advancements in order to retain its market position and industry standards.
We maintain our Neutral recommendation on the stock. Arrowretains a Zacks #3 Rank, which translates into a short-term Hold rating.