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Avnet, Inc.

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The divestment of the Technology Solution division will allow Avnet to focus on high-growth areas such as marketing electronic components and related products in the supply chain. The company intends to use its resources to make investments in embedded solutions, IoT and critical digital platforms as well as expand its footprint in newer markets. In Oct 2016, Avnet completed the much-awaited acquisition of Premier Farnell plc. In our opinion, the acquisition will strategically fit with Avnet’s policy of focusing on high growth electronic component business. However, a significant portion of Avnet’s revenues comes from the sale of semiconductors, which is a cyclical industry, characterized by changes in technology and manufacturing capacity and subject to significant market upturns and downturns. Intensifying competition from peers also remains a headwind. Notably, the stock has underperformed the broader market over the last one year.

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