PC Connection Q2 2009 Earnings Transcript

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2009-07-30 17:19:11.0

Tags: Public Sector, Notebook, Analyst, PC Connection Inc., Netbook, Sales Strategy, Microsoft Windows 7, Sales Force Management, Hardware, Sales, Netbooks, Nettops & MIDs, Seeking Alpha

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). And our first question today comes from Brian Alexander of Raymond James.

Unidentified Analyst

Good morning. This is Nabil Hanano (ph) in for Brian Alexander. I was wondering if you could speak about linearity for Q2 by customer segment. We've seen a lot of signs of stabilization in the North American market and if those trends have continued into July.

Timothy McGrath

Good morning this is Tim. I'll take that question. So overall our sales grew consecutively throughout the quarter for each of our sales segments. June was the largest sales month for the quarter and that was very similar to last year.

Our large accounts are more direct and our public sector business did show greater backlog at the June end of quarter than the previous year. So ultimately, the seasonality and the linearity are just about what we'd expect.

Unidentified Analyst

And what about going into Q3, have those trends continued?

Timothy McGrath

As you know historically, we don't provide guidance. However I think that in general terms, we're planning for moderate growth and we do expect the seasonality lift from our public sector business.

Unidentified Analyst

Okay, that's helpful Thank you. And what are your thoughts on PC upgrade cycle into next year given the aged install base and the imminent release of Windows 7?

Timothy McGrath

So the question there with Windows 7, we're encouraged in particular for our S&P segments. If you look at the effect that Window will have on the ecosystem overall, I think it's very positive.

However, we're conscious because we saw with Microsoft Vista, in many cases, it really didn't live up to the demand expectations. So we have a positive outlook. We're cautious. We think that the enterprise segments will be a little slower to adopt given their requirements.

Unidentified Analyst

Okay and then also regarding PCs, what are you seeing with Netbooks. Your total Notebook revenue declined 22% year-over-year. Your PC ASP relation I believe was up. How much is Netbooks contributing to that?

Timothy McGrath

So, we are seeing good growth in our Netbooks and as a matter of fact, specifically the Netbook category was 7% of our Notebook category in Q2 '09. That compares to about 1% in Q2 '08. And compared to about 5.5% for Q1 '09. So we are seeing a positive growth in the Netbook category. And as you might expect, that does reflect in the ASP component for Notebooks overall as a category.

 

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