3SOF

Quote from: Garoh on October 05, 2007, 07:52:54 PM
Nice breakout

Indeed, now we just need to clear $24.23 to be free to run towards $30 plus. I put my valuation model back in place, it says that, according to my estimates, SYX will be at roughly $60 two and a half years from now. I'll keep holding SYX for the long term.

SYX will probably have to work a bit around this $24.23 technical resistance, but it looks clear that the medium term trend is up. I also enjoy the fundamentals of the company, which I know well as you can read on this thread and I'll keep holding SYX for the long term.

PC Mall (MALL) has been performing better than than SYX lately, but I believe SYX has the better fundamentals, and sold MALL today, still holding SYX.

http://stockcharts.com/h-sc/ui?s=MALL&p=D&b=5&g=0&id=p59191861522

Quote from: BigSully1 on October 09, 2007, 02:38:48 PM
PC Mall (MALL) has been performing better than than SYX lately, but I believe SYX has the better fundamentals, and sold MALL today, still holding SYX.

http://stockcharts.com/h-sc/ui?s=MALL&p=D&b=5&g=0&id=p59191861522

Hi BigSully, thanks for the information. I always thought MALL was a much larger market cap company, still just $220 M. Its fundamental trends and valuation are also quite attractive.

$0.22 EPS in Q2 2007, up from $0.03 in Q2 2006 was very significant. And Q2 2007 was the best quarter since Q4 2000 for MALL. You know I love SYX, but MALL also looks very attractive ... it seems like the whole industry (online retailing of electronic products) is coming to life, doesn't it?

Well, SYX has other ingredients, like Systemax computers and the ProfitCenter software unit.

Can't you own both, SYX and MALL?

I must say that I was very positively surprised by MALL's fundamentals. If you have some time, why do you think SYX is better than MALL? Thanks

Anyway, SYX looks good too ... the stock has been resilient and insiders have been buying, so I expect better than expected 3rd quarter results. It's weird, but I see there are no analysts covering SYX, so, no numbers to beat ... just EPS multiple comparisons to make when SYX reports numbers.

I'll continue holding SYX for the long term.

Quote from: David Randolph on October 10, 2007, 08:21:51 AM

Quote from: BigSully1 on October 09, 2007, 02:38:48 PM
PC Mall (MALL) has been performing better than than SYX lately, but I believe SYX has the better fundamentals, and sold MALL today, still holding SYX.

http://stockcharts.com/h-sc/ui?s=MALL&p=D&b=5&g=0&id=p59191861522

Hi BigSully, thanks for the information. I always thought MALL was a much larger market cap company, still just $220 M. Its fundamental trends and valuation are also quite attractive.

$0.22 EPS in Q2 2007, up from $0.03 in Q2 2006 was very significant. And Q2 2007 was the best quarter since Q4 2000 for MALL. You know I love SYX, but MALL also looks very attractive ... it seems like the whole industry (online retailing of electronic products) is coming to life, doesn't it?

Well, SYX has other ingredients, like Systemax computers and the ProfitCenter software unit.

Can't you own both, SYX and MALL?

I must say that I was very positively surprised by MALL's fundamentals. If you have some time, why do you think SYX is better than MALL? Thanks

Anyway, SYX looks good too ... the stock has been resilient and insiders have been buying, so I expect better than expected 3rd quarter results. It's weird, but I see there are no analysts covering SYX, so, no numbers to beat ... just EPS multiple comparisons to make when SYX reports numbers.

I'll continue holding SYX for the long term.

Mostly going by Sales+profit margins+ R.O.E. Yes I think MALL is still attractive overall, and what I probably should have said instead was that I believe SYX has the greater potential for further share price appreciation at this point. A couple months ago, MALL was much more attractive.

Yes I could keep both, but I'm at the point now where I need to look to sell those I feel have less price potential in order to make any new purchases, AUY was one that I felt the need to buy back yesterday.

Yes it is weird, the circumstances surrounding the lacking analyst coverage of SYX.  I think SYX still holds a certain stigma about it, maybe will for a long time to come.

QuoteYes it is weird, the circumstances surrounding the lacking analyst coverage of SYX.  I think SYX still holds a certain stigma about it, maybe will for a long time to come.

Nah, if we can surpass $30 in six months, like I think we will, I'm sure analysts will start covering the stock, after all, they won't be able to ignore a $1 B plus market cap company pushing up to new ... well, I was going to write "all time high", but I see now that was in 1996 at $53. Let's say new 10 year high.

SYX was doing well yesterday, crossing the $24.23 resistance level, but the general market took most things down by the close. Anyway, I think the general market will have just one more dip this morning and climb back up and rise another 3-5% until the end of the year. The bull market is alive and kicking. SYX should close 2007 above $30, I'll keep holding the stock.

SYX closed above the $24.23 short term resistance level. No new fundamental information out. I'll continue holding the stock for the long term.

But, didn't SYX close above the $24.23 resistance level and didn't that mean it would go higher? Well, no, that bullish breakout didn't mean anything.

I need to learn to disregard short term technical information both when it goes against my views and also when it agrees with me. But you know, it isn't easy to say something new about the fundamentals each day, I just do these daily updates so that you have something to read about the stocks you possibly own. I think this work increases your confidence in the holdings, you know I won't just say hold and forget, but face the facts every trading day.

Let's just check www.tigerdirect.com for a change. It looks cool, as always.

I'll continue holding SYX.

The following press release was out more than a month ago:

• ProfitCenter Software Announces Appointment of John Marrah as President & Chief Executive Officer
Business Wire (Mon, Aug 27)

I'm just referring to it again to say that I deposit great hope on this business unit, to expand SYX's net profit margin from the current 1.92% to something like 5%, because as we all know, the software industry almost always sports a fat net profit margin.

I'll keep holding SYX for the long term.

Nothing new for SYX today, I'll continue holding the stock.

If SYX goes down some more these bears will be selling at prices insiders were buying just a few weeks ago. I'm pretty positive SYX will post good 3rd quarter earnings, or else why would insiders be buying?

I'll continue holding SYX for the long term.

No new information on SYX ... I wonder why there aren't any analysts covering SYX, despite being a $800 M plus market cap company. This compresses the company's valuation.

I just wrote investors relations to know if there are any efforts being made to get analyst coverage.

I'll continue holding SYX.

PC Connection, Inc. Reports Third Quarter Results
Thursday October 25, 6:30 am ET 
Company Announces Record Revenue, Improved Gross Margin, and Growth in Earnings
THIRD QUARTER HIGHLIGHTS:
-- Record net sales: $456.5 million, up 10% year over year
-- Gross margin: 12.6%, up from 12.3% last year
-- Net income: $7.7 million, up 75% year over year
-- Diluted earnings per share: $.28, up from $.17 last year


MERRIMACK, N.H.--(BUSINESS WIRE)--PC Connection, Inc. (NASDAQ: PCCC - News), a leading direct marketer of information technology (IT) products and services, today announced results for the quarter ended September 30, 2007. Net sales for the three months ended September 30, 2007 increased by $41.3 million, or 9.9%, to $456.5 million from $415.2 million for the three months ended September 30, 2006. Net income for the quarter was $7.7 million, or $.28 per share, compared to $4.4 million, or $.17 per share, for the corresponding prior year quarter.
ADVERTISEMENT


"We are pleased with our record-setting Q3 performance," said Patricia Gallup, Chairman and Chief Executive Officer. "We achieved the largest revenue quarter in the Company's 25-year history, and at the same time, we experienced a 76% increase in operating income and a 65% increase in earnings per share over the third quarter of 2006."

Net sales for the nine months ended September 30, 2007 increased by $92.0 million, or 7.6%, to $1,295.8 million from $1,203.8 million for the nine months ended September 30, 2006. Net income for the nine months ended September 30, 2007 was $16.8 million, or $.62 per share, compared to $9.2 million, or $.36 per share, for the nine months ended September 30, 2006.

Quarterly Sales Growth by Business Segment:


Net sales for the SMB segment increased by 6.1% to $234.9 million compared to the third quarter of 2006. Although sales to consumers declined, corporate outbound sales within the segment grew 15.7% year over year, reflecting our focus on business customers.
Net sales for MoreDirect, Inc., our Large Account segment, increased by 14.4% to $130.0 million compared to the third quarter of 2006. This segment continues to obtain new customers and a greater share of existing customers' business.
Net sales for GovConnection, Inc., our Public Sector segment, increased by 14.2% to $91.6 million compared to the third quarter of 2006. Double digit growth was generated with federal, state, and local government and education customers.
Quarterly Sales Growth By Product Mix:


Desktop computer and server sales increased 16.3% year over year, accounting for 14.4% of net sales in the third quarter of 2007 compared to 13.6% for the corresponding prior year quarter.
Sales of storage devices increased 19.5% year over year, accounting for 9.0% of net sales in the third quarter of 2007 compared to 8.3% for the corresponding prior year quarter.
Notebooks and PDAs, our largest product sales category, accounted for 15.7% of net sales in the third quarter of 2007 compared to 17.4% for the corresponding prior year quarter.
Software sales represented 12.8% of net sales in the third quarter of 2007 compared to 12.4% for the corresponding prior year quarter.
Gross profit was $57.5 million for the third quarter of 2007 compared to $51.1 million for the third quarter of 2006. Gross profit margin, as a percentage of net sales, was 12.6% in the third quarter of 2007 compared to 12.3% in the third quarter of 2006. As noted in our first quarter 2007 earnings release, we recorded substantially all vendor consideration in 2007 as a reduction to cost of inventory purchases, pursuant to Issue No. 02-16 of the Emerging Issues Task Force. Accordingly, this additional consideration accounted for a 22 basis-point increase in gross margin compared to the third quarter of 2006. Larger agency fee revenues in the third quarter of 2007 were largely offset by lower back-end vendor rebates.

Overall annualized sales productivity increased 17% in the third quarter of 2007 compared to the third quarter of 2006. Sales productivity in our Large Account segment increased 28% in the third quarter of 2007 compared to the third quarter of 2006. For our SMB and Public Sector segments, productivity increased 15% and 9%, respectively. On a consolidated basis, the total number of sales representatives, after the inclusion of inside sales representatives, was 654 as of September 30, 2007, compared to 713 sales representatives at September 30, 2006. We estimate sales representative headcount at December 31, 2007 to grow to approximately 685.

Selling, general and administrative expenses ("SG&A") totaled $45.6 million for the third quarter of 2007 compared to $43.3 million for the third quarter of 2006. SG&A improved as a percentage of net sales to 10.0% for the third quarter of 2007 compared to 10.4% for the third quarter of 2006, reflecting our continuing effort to leverage our cost structure.

Gallup concluded, "PC Connection remains committed to making the investments necessary to continue to grow our business and improve operating performance. We believe we have the strategies and talent in place to position us well for future success and enhance long-term shareholder value."

About PC Connection, Inc.

PC Connection, Inc., a Fortune 1000 company, owns three sales companies: PC Connection Sales Corporation, MoreDirect, Inc., and GovConnection, Inc., headquartered in Merrimack, NH, Boca Raton, FL, and Rockville, MD, respectively. All three companies can deliver custom-configured computer systems overnight. Investors and media can find more information about PC Connection, Inc. at http://ir.pcconnection.com.

PC Connection Sales Corporation (1-800-800-5555), the original business of PC Connection, Inc. serving the small- and medium-sized business sector (SMB), is a rapid-response provider of information technology (IT) products and services. It offers more than 150,000 brand-name products through its staff of technically trained sales account managers and catalog telesales representatives, catalogs, and publications, and its website at www.pcconnection.com. The subsidiary serves the Apple/Macintosh community through its MacConnection division (1-800-800-2222), which also publishes specialized catalogs and is online at www.macconnection.com.

MoreDirect, Inc. (561-237-3300), www.moredirect.com, provides corporate technology buyers with a comprehensive web-based e-procurement solution and in-depth IT supply-chain expertise, serving as a one-stop source by aggregating more than 300,000 products from the inventories of leading IT wholesale distributors and manufacturers. MoreDirect's TRAXX® system is a seamless end-to-end interface that empowers clients to electronically source, evaluate, compare prices, and track related technology product purchases in real-time.

GovConnection, Inc. (1-800-800-0019) is a provider of IT products and services to federal, state, and local government agencies and educational institutions through specialized account managers, catalogs, and publications, and online at www.govconnection.com.

pccc-g

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to, the impact of changes in market demand and the overall level of economic activity, or in the level of business investment in information technology products, competitive products and pricing, product availability and market acceptance, new products, fluctuations in operating results, and the ability of the Company to hire and retain essential personnel, and other risks detailed under the caption "Risk Factors" in the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission for the quarter ended June 30, 2007. More specifically, the statements in this release concerning the Company's outlook for 2007 and the statements concerning the Company's gross margin percentage, productivity, and selling and administrative costs and other statements of a non-historical basis are forward-looking statements that involve certain risks and uncertainties. Such risks and uncertainties include the ability to realize market demand for and competitive pricing pressures on the products and services marketed by the Company, the continued acceptance of the Company's distribution channel by vendors and customers, continuation of key vendor and customer relationships and support programs and the ability of the Company to hire and retain qualified sales representatives and other essential personnel. The Company assumes no obligation to update the information in this press release or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise.

CONSOLIDATED SELECTED FINANCIAL HIGHLIGHTS 
At or for the Three Months Ended September 30,     2007              2006           
(Dollars and shares in thousands, except operating data, price/earnings ratio, and per share data)   % of    % of  %   
      Net Sales      Net Sales  Change 
         
Operating Data:       
Net sales  $  456,470     $  415,213    9.9  % 
Diluted earnings per share  $  .28     $  .17    64.7  % 
         
Gross profit margin   12.6  %     12.3  %   
Operating margin   2.6      1.6     
Return on equity (1)   14.5      9.8     
         
Catalogs distributed   3,199,000      3,641,000    (12.1  )% 
Orders entered (2)   363,700      381,700    (4.7  )% 
Average order size (2)  $  1,543     $  1,295    19.2  % 
         
Inventory turns (1)   22      22     
Days sales outstanding   45      43     
         
         
Product Mix:       
Notebooks & PDAs  $  71,730   15.7  %   $  72,123   17.4  %  (0.5  )% 
Desktops/Servers   65,776   14.4     56,545   13.6   16.3   
Storage Devices   41,233   9.0     34,508   8.3   19.5   
Software   58,104   12.8     51,692   12.4   12.4   
Net/Com Products   37,924   8.3     34,610   8.3   9.6   
Printers & Printer Supplies   43,449   9.5     43,535   10.5   (0.2  ) 
Video, Imaging & Sound   65,236   14.3     57,250   13.8   13.9   
Memory & System Enhancements   20,460   4.5     19,028   4.6   7.5   
Accessories/Other     52,558   11.5         45,922   11.1     14.5   
$  456,470   100.0  %   $  415,213   100.0  %  9.9  % 
         
         
Net Sales of Enterprise Server and Networking Products (included in the above Product Mix): 
         
$  146,913     32.2  %   $  125,766     30.3  %  16.8  % 
         
         
Stock Performance Indicators:       
Actual shares outstanding   26,815      25,695     
Total book value per share  $  8.10     $  7.16     
Tangible book value per share  $  5.84     $  4.77     
Closing price  $  12.50     $  11.55     
Market capitalization  $  335,188     $  296,777     
Trailing price/earnings ratio (3)   16      32     
         
(1) Annualized 
(2) Does not reflect cancellations or returns 
(3) Earnings is based on the last four quarters 
SELECTED SEGMENT INFORMATION                         
For the Three Months Ended September 30,     2007        2006 
  Net     Gross   Net     Gross 
(Dollars in thousands)   Sales   Margin (%)   Sales   Margin (%) 
           
PC Connection Sales Corporation (SMB)   $  234,850   14.3  %   $  221,330   13.3  % 
MoreDirect (Large Account)    130,027   11.5     113,690   11.4   
GovConnection (Public Sector)      91,593   9.8         80,193   10.8     
Total   $  456,470   12.6  %   $  415,213   12.3  % 
CONSOLIDATED INCOME STATEMENTS                             
Three Months Ended September 30,     2007     2006 
(Amounts in thousands, except per share data)   Amount     % of Net Sales   Amount     % of Net Sales 
           
Net sales   $  456,470    100.0  %    $  415,213    100.0  % 
Cost of sales      398,940      87.4          364,070      87.7     
Gross Profit    57,530    12.6      51,143    12.3   
           
Selling, general and administrative expenses    45,572    10.0      43,291    10.4   
Special charges      -      -          1,050      0.3     
Income From Operations    11,958    2.6      6,802    1.6   
           
Interest expense    (218  )   (0.1  )     (394  )   (0.1  ) 
Other, net    192    0.1      38    -   
Income tax provision      (4,247  )   (0.9  )       (2,058  )   (0.4  ) 
Net Income   $  7,685      1.7  %    $  4,388      1.1  % 
           
           
Weighted average common shares outstanding:           
Basic      26,814            25,446       
Diluted      27,017            25,667       
Earnings per common share:           
Basic   $  0.29         $  0.17       
Diluted   $  0.28         $  0.17       
CONSOLIDATED INCOME STATEMENTS                             
Nine Months Ended September 30,     2007     2006 
(Amounts in thousands, except per share data)   Amount     % of Net Sales   Amount     % of Net Sales 
           
Net sales   $  1,295,772    100.0  %    $  1,203,785    100.0  % 
Cost of sales      1,134,287      87.5          1,055,481      87.7     
Gross Profit    161,485    12.5      148,304    12.3   
           
Selling, general and administrative expenses    134,770    10.4      129,780    10.8   
Special charges      -      -          2,391      0.2     
Income From Operations    26,715    2.1      16,133    1.3   
           
Interest expense    (668  )   (0.1  )     (1,475  )   (0.1  ) 
Other, net    653    0.1      34    -   
Income tax provision      (9,877  )   (0.8  )       (5,487  )   (0.4  ) 
Net Income   $  16,823      1.3  %    $  9,205      0.8  % 
           
           
Weighted average common shares outstanding:           
Basic      26,765            25,330       
Diluted      27,009            25,459       
Earnings per common share:           
Basic   $  0.63         $  0.36       
Diluted   $  0.62         $  0.36       
CONSOLIDATED BALANCE SHEETS     September 30,     December 31, 
(amounts in thousands)        2007         2006     
         
ASSETS       
Current Assets:       
Cash and cash equivalents    $  23,685    $  17,582   
Accounts receivable, net      187,020     170,222   
Inventories–merchandise      75,537     69,407   
Deferred income taxes      4,403     3,837   
Income taxes receivable      675     627   
Prepaid expenses and other current assets      3,578         3,882     
Total current assets    294,898     265,557   
Property and equipment, net     20,319     19,542   
Goodwill      56,867     56,867   
Other intangibles, net      3,559     4,363   
Other assets        264         355     
Total Assets     $  375,907      $  346,684     
         
LIABILITIES AND STOCKHOLDERS' EQUITY     
         
Current Liabilities:       
Current maturities of capital lease obligations:     
To affiliate     $  504    $  464   
To third party      73     395   
Accounts payable      117,013     110,977   
Accrued expenses and other liabilities    18,527     17,389   
Accrued payroll        7,874         9,367     
Total current liabilities    143,991     138,592   
Capital lease obligations, less current maturities:     
To affiliate      4,453     4,836   
Other liabilities      2,883     -   
Deferred income taxes        7,430         6,352     
Total Liabilities      158,757         149,780     
Stockholders' Equity:       
Common stock    272     269   
Additional paid-in capital    93,145     89,537   
Retained earnings    125,798     109,321   
Treasury stock at cost      (2,065  )      (2,223  ) 
Total Stockholders' Equity      217,150         196,904     
Total Liabilities and Stockholders' Equity   $  375,907      $  346,684     
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY 
Nine months ended September 30, 2007 (amounts in thousands) 
Common Stock
    Additional     Retained     Treasury Shares
     
   Shares     Amount   Paid-In Capital     Earnings     Shares     Amount     Total 
                 
Balance – January 01, 2007  26,862   $269   $89,537   $109,321   (352)   ($2,223)   $196,904 
               
Cumulative effect of change in               
accounting principle  -   -   -   (346)   -   -   (346) 
               
Stock

compensation expense
-   -   202   -   -   -   202 
               
Exercise of stock options, including               
income tax benefits  305   3   3,430   -   -   -   3,433 
               
Issuance of stock under Employee               
Stock Purchase Plan  10   -   134   -   -   -   134 
               
Nonvested stock awards      (158)     25   158   - 
               
Net income  -   -   -   16,823   -   -   16,823 
               
Balance – September 30, 2007  27,177   $272   $93,145   $125,798   (327)   ($2,065)   $217,150 
CONSOLIDATED STATEMENTS OF CASH FLOWS             
Nine Months Ended September 30, (Amounts in thousands)        2007           2006     
       
Cash Flows from Operating Activities:     
       
Net income   $  16,823    $  9,205   
Adjustments to reconcile net income to net cash provided by operating activities:     
     
Depreciation and amortization    5,158     5,227   
Provision for doubtful accounts    1,482     2,094   
Deferred income taxes    512     1,536   
Loss on disposal of fixed assets    53     63   
Stock compensation expense    202     277   
Gross excess tax benefit from exercise of stock options    (359  )    (1  ) 
Income tax benefits from exercise of stock options    889     231   
       
Changes in assets and liabilities:     
Accounts receivable    (18,280  )    1,415   
Inventories    (6,130  )    6,945   
Prepaid expenses and other current assets    256     1,142   
Other non-current assets    91     36   
Accounts payable    6,036     (14,723  ) 
Accrued expenses and other liabilities      2,182         5,533     
Net cash provided by operating activities      8,915         18,980     
       
       
Cash Flows from Investing Activities:     
       
Purchases of property and equipment    (5,184  )    (6,401  ) 
Proceeds from sale of property and equipment      -         20     
Net cash used for investing activities      (5,184  )      (6,381  ) 
       
       
Cash Flows from Financing Activities:     
       
Proceeds from short-term borrowings    3,313     317,280   
Repayment of short-term borrowings    (3,313  )    (330,159  ) 
Repayment of capital lease obligations    (665  )    (614  ) 
Exercise of stock options    2,544     2,822   
Gross excess tax benefit from exercise of stock options    359     1   
Issuance of stock under Employee Stock Purchase Plan      134         120     
Net cash provided by (used for) financing activities      2,372         (10,550  ) 
Increase in cash and cash equivalents    6,103     2,049   
Cash and cash equivalents, beginning of period      17,582         9,770     
Cash and cash equivalents, end of period   $  23,685      $  11,819     




Contact:
PC Connection, Inc.
Stephen Baldridge, 603-683-2322
VP of Finance & Corporate Controller

Thanks for the info Sully

There's intense competition in the online electronics retailing industry, and that probably explains the extremely slim profit margin of the business. It doesn't mean it's a bad business.

QuoteI just wrote investors relations to know if there are any efforts being made to get analyst coverage.

I got this reply from SYX:

«Although historically we have had no research coverage, we have a relatively new CFO, Larry Reinhold, who has been reaching out to sell side analysts connected to the industry and perhaps one or more of them will decide to cover the company.

Donna Gehnrich

Systemax Inc.
(516) 608-7020»

So, they're working on it.

I'll continue holding SYX for the long term.

SYX crossed the $22 resistance level with elegance and then it came back down to test the new support, prior resistance. Now it is going back up ... if everything continues "by the book" it will close above $26 in a short period of time.

Anyway, I need to strengthen my fundamental case on this one. It isn't as strong as in other holdings.

I'll keep holding SYX.