CENTENNIAL, Colo. - Arrow Electronics (NYSE:ARW), a global provider of technology solutions, has entered into a new agreement with Broadcom (NASDAQ:AVGO) to distribute VMware (NYSE:VMW) solutions across the United States and Canada. The announcement made today marks a significant expansion of Arrow's North American portfolio, providing channel partners with access to a comprehensive suite of VMware products through the ArrowSphere platform.
With this agreement, Arrow will offer VMware's private cloud infrastructure solutions, including VMware Cloud Foundation, VMware vSphere Foundation, VMware vSAN, and VMware vSphere Standard. Channel partners will benefit from Arrow's support services, which encompass personalized assistance, training programs, and certified resources throughout the commercial IT lifecycle.
Ben Klay, president of Arrow's enterprise computing solutions business in North America, expressed enthusiasm about the enhanced relationship with Broadcom, emphasizing the opportunity for channel partners to increase their market share and profitability through the expanded VMware offerings.
Cynthia Loyd, vice president of Global Partners (NYSE:GLP) and Commercial Sales at Broadcom, highlighted Arrow's global reach and local expertise as key components in Broadcom's strategy to deliver value to channel partners and customers.
In addition to product distribution, Arrow will provide specialized services, sales engineering, and technical support for VMware solutions, acting as an extension of Broadcom's support.
Arrow Electronics, which reported global sales of $33 billion in 2023, is known for engineering and sourcing technology solutions for a diverse range of industries and markets. The company's expanded distribution of VMware products is poised to further its influence and capabilities in the technology sector. Current Arrow channel partners can now access and order VMware solutions via the ArrowSphere platform, while Broadcom-authorized VMware resellers have the opportunity to onboard with Arrow.
This expansion of VMware product availability is based on a press release statement from Arrow Electronics.
In other recent news, Arrow Electronics has been in the spotlight due to its recent financial performance and strategic developments. The company reported third-quarter 2024 results that exceeded expectations, with consolidated sales of $6.8 billion and non-GAAP earnings per share (EPS) of $2.38, despite a 15% year-over-year sales decline. Arrow Electronics also announced cost reduction plans expected to save $90 million to $100 million by 2026, with $135 million in restructuring expenses anticipated.
Truist Securities adjusted its price target on shares of Arrow Electronics, reducing it to $120 from the previous $141, while maintaining a Hold rating. The firm's analysts cite concerns about the electronics supply chain and a potentially problematic supplier transition as reasons for the adjustment. Truist Securities has also revised its projected earnings per share (EPS) for the calendar year 2025 (CY25) to $13.37, down from the previously estimated $16.58.
In other company developments, Arrow Electronics plans to exit non-core product lines, leading to a $50 million non-cash charge in Q4. Despite challenges within the Global Components due to excess inventory and macroeconomic headwinds, the company reported strong cash generation, with $1.1 billion in operating cash flow over the past year. Arrow Electronics remains focused on strategic growth areas such as mass market demand creation and IT-as-a-Service. These are recent developments for Arrow Electronics.
InvestingPro Insights
Arrow Electronics' recent agreement with Broadcom to distribute VMware solutions aligns with the company's position as a prominent player in the Electronic Equipment, Instruments & Components industry, as highlighted by InvestingPro Tips. This move could potentially help Arrow address some of the challenges it's currently facing, such as the anticipated sales decline and downward earnings revisions noted by analysts.
Despite these headwinds, Arrow Electronics maintains a strong financial position. According to InvestingPro Data, the company boasts a market capitalization of $6.39 billion and a revenue of $28.49 billion over the last twelve months as of Q3 2023. The company's P/E ratio of 10.69 (adjusted for the last twelve months) suggests that it may be undervalued relative to its earnings.
An InvestingPro Tip indicates that Arrow's management has been aggressively buying back shares, which could signal confidence in the company's future prospects. This strategy, combined with the company's high shareholder yield, may help support the stock price as Arrow navigates the current market challenges.
It's worth noting that InvestingPro offers 12 additional tips for Arrow Electronics, providing investors with a more comprehensive analysis of the company's financial health and market position. These insights could be particularly valuable as Arrow expands its product offerings and seeks to capitalize on new market opportunities.
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