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Avnet Buys ExitCertified: Expands Technology Education Unit

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Avnet Inc. (AVT - Free Report) recently announced the acquisition of ExitCertified, a leading certified IT training provider in North America. However, the terms of the deal remain under the wraps.

According to Avnet’s press release Ottawa, Canada-based ExitCertified “offers education through its training centers as well as on-site, self-paced and instructor-led online training with its market-leading MVP/iMVP virtual training platform”.

The company, founded in 2001, provides several IT training courses authorized from various leading technology vendors such as Inc.’s (AMZN - Free Report) Amazon Web Services, Brocade, Cloudera, ForgeRock, Oracle (ORCL - Free Report) , Pivotal, Red Hat, SAP, Symantec and VERITAS. In the fiscal year ended Jun 2015, the company generated approximately $24 million as revenues.

Avnet intends to integrate the operations of ExitCertified into its Education Solutions group which comes under Avnet Technology Solutions’ Global Services business.

We believe that the acquisition will not only increase Avnet’s revenues base but also strengthen the technology education offerings. Currently, Avnet Technology Solutions global services offer more than 9,500 authorized training IT courses from over 20 leading technology vendors.

According to Avnet, “With ExitCertified, we expand our offering of leading, award winning courses with connected and virtual classrooms in high growth areas including big data, cloud and security along with converged and hyper-converged solutions.” Additionally, the acquisition is anticipated to solidify its market position in North America and expand its education services portfolio in Latin America, APAC and EMEA.

Acquisitions form an important part of the company’s core strategy to bolster portfolio and expand global operations, while contributing significantly to the revenue stream.

In Nov 2015, the company acquired Orchestra Service is a specialist German IT distributor of innovative storage solutions and services around EMC products. During fiscal 2014, the company bought three companies with combined annualized revenues of roughly $492 million. In fiscal 2013, it acquired 12 companies with combined annualized revenues of nearly $1.18 billion.

Avnet’s strong balance sheet and cash flow provide it with the financial flexibility to undertake strategic initiatives and expand in newer markets. The company’s cash and cash equivalents was $824.7 million at the end of first-quarter fiscal 2016.

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 Arrow Electronics Inc. (ARW - Free Report) and Ingram Micro also remains a headwind.

Currently, Avnet carries a Zacks Rank #3 (Hold).

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