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Insight Enterprises Inc. Reports Operating Results (10-Q)

November 04, 2010 | About:
10qk

10qk

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Insight Enterprises Inc. (NSIT) filed Quarterly Report for the period ended 2010-09-30.

Insight Enterprises Inc. has a market cap of $713.6 million; its shares were traded at around $15.53 with a P/E ratio of 10.8 and P/S ratio of 0.2. NSIT is in the portfolios of Arnold Schneider of Schneider Capital Management, Richard Pzena of Pzena Investment Management LLC, Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Net sales in North America increased 27%, or $185.2 million, for the three months ended September 30, 2010 compared to the three months ended September 30, 2009. Net sales of hardware and software increased 34% and 25%, respectively, year over year, while net sales in the services category declined 14% year to year. The increase in hardware net sales is primarily due to higher volume with the year over year improvement in the demand environment for IT products compared to the depressed levels of IT spending experienced in North America in 2009. The increase in software sales year over year relates to higher volume with multiple publishers. The decrease in sales of services year to year resulted primarily from a large services engagement during the third quarter of the prior year that did not recur in the current year.

Net sales in North America increased 18%, or $365.4 million for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009, primarily as a result of the strong hardware performance throughout each quarter of 2010. On a year to date basis, net sales of hardware and software increased 28% and 7%, respectively, year over year, while net sales in the services category declined 12% year to year.

Net sales in EMEA increased 8%, or $19.4 million, in U.S. dollars, for the three months ended September 30, 2010 compared to the three months ended September 30, 2009. Excluding the effects of foreign currency movements, net sales were up 16% compared to the third quarter of last year. Net sales of hardware grew 1% year over year in U.S. dollars, 7% excluding the effects of foreign currency movements, due to higher demand across certain client groups. Software net sales increased 12% year over year in U.S. dollars, 22% excluding the effects of foreign currency movements, due primarily to higher volume and new client engagements reflecting the year over year improvement in the global IT demand environment compared to the depressed levels of IT spending experienced in EMEA in 2009. Net sales from services increased 33% year over year in U.S. dollars, 44% excluding the effects of foreign currency movements, due primarily to new client engagements.

Net sales in EMEA increased 18%, or $143.9 million, in U.S. dollars, for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009. Excluding the effects of foreign currency movements, net sales were up 21% compared to the first nine months of last year. Hardware, software and services sales increased 14%, 20% and 29%, respectively, year over year. Excluding the effects of foreign currency movements, the increases were 15%, 24% and 32% for hardware, software and services, respectively. The year to date increases primarily resulted from higher volume, new client engagements and new product offerings from our publishers.

EMEAs gross profit increased 8% in U.S. dollars for the three months ended September 30, 2010 compared to the three months ended September 30, 2009. Excluding the effects of foreign currency movements, gross profit was up 16% compared to the third quarter of last year. As a percentage of net sales, gross margin declined slightly due primarily to a lower mix of agency fees from enterprise software agreements of 29 basis points. This decrease was offset partially by a 14 basis point increase in product margin, which includes vendor funding, and an increase in margin related to sales of services of 12 basis points resulting from a shift in client mix. For the nine months ended September 30, 2010, gross profit increased 11% compared to the nine months ended September 30, 2009. Excluding the effects of foreign currency movements, gross profit increased 15% compared to the nine months ended September 30, 2009. As a percentage of net sales, gross margin for the nine month periods declined 80 basis points, primarily due to decreases in agency fees for enterprise software agreement renewals of 48 basis points and a 36 basis point decline in product margin, including vendor funding.

APACs gross profit increased 25% for the three months ended September 30, 2010 compared to the three months ended September 30, 2009. Excluding the effects of foreign currency movements, gross profit increased 18% compared to the third quarter of last year. As a percentage of net sales, gross margin increased by 460 basis points, due primarily to an increase of 288 basis points in product margin, which includes vendor funding, and an increase in the margin contribution from agency fees for enterprise software agreements of 152 basis points. These increases resulted primarily from a shift in client mix, with a lesser percentage of public sector clients during the third quarter of 2010. For the nine months ended September 30, 2010, gross profit increased 33% compared to the nine months ended September 30, 2009. Excluding the effects of foreign currency movements, gross profit increased 19% compared to the nine months ended September 30, 2009. As a percentage of net sales, gross margin remained flat at 14.2%, primarily due to increases in agency fees from enterprise software agreements of 92 basis points, partially offset by a 74 basis point decrease in software product margin, including vendor funding, and a decrease in margin related to sales of services of 11 basis points.

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