Article

Channel stocks lose value in wake of banking crisis

Rivka Gewirtz Little
When the banks crashed and markets began to swing wildly, technology companies predicted they wouldn't be hit hard by the storm. And for a while they did remain stable, even as their customers faltered. But those days are over -- at least for now.

In the last two months, companies in the channel ecosystem -- public systems integrators, partner-driven vendors and distributors -- have seen their share values plummet. SearchITChannel.com compared share prices for a group of channel companies from Aug. 6 to Nov. 5 and found that in some cases channel shares lost as much as a quarter of their value from three months ago.

The survey also found that many channel companies saw a slight upturn in share value around Election Day, only to lose those gains the day after Barack Obama was elected.

Distributors

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Technology distributors saw large losses in share value over the period in question. Tech Data closed Wednesday at $22.02, down $13.47 from Aug. 6. Avnet shares traded at $16.98 at closing Wednesday, down $18.51 from Aug. 6. Ingram Micro closed Wednesday at $13.99, down $5.80 from Aug. 6. All three companies saw shares drop by between 20 and 30 cents from Nov. 4 to Nov. 5.

Solution providers

Large, publicly traded solution providers aren't faring much better. Accenture closed Nov. 5 at $31.37, down $9.27 from $40.64 Aug. 6. IBM, which derives just under half its revenue from its services division, closed at $89.94, down $39.22 from August. Hewlett-Packard (HP), which sees less than a quarter of its business come from services, fell $15.75 since Aug. 6, closing at $35.25 on Nov. 5. BT Group closed at $27.13 Nov. 5, down $5.15 from August 6.

And smaller, publicly held solution providers haven't fared that well either. CGI Group closed Nov. 5 at $8.65, down $2.02 from Aug. 6. Convergys lost $5.81 in share value since Aug. 6, closing at $7.44 Nov. 5. All these companies also saw significant drops from Nov. 4 to Nov. 5. BT fell nearly $7 in one day, HP dropped about two dollars and IBM dropped $3.46 by close on Nov. 5.

Vendors

Technology vendors are also feeling the pain. SearchITChannel.com surveyed a handful of channel-driven manufacturers and found that their shares have taken the same beating as those of their distribution and sales channel partners. As of Nov. 5, Microsoft shares were down $4.83 from Aug. 6 at $22.08; Oracle Corp. was down $5.04 at $17.82; Cisco was down $6.54 at $17.39; Juniper was down $9.10 at $17.21; Citrix was down $4.67 at $24.61; EMC was down $3.78 at $11.01; and VMware was down $9.40 at $27.51. From Nov. 4 to Nov. 5, VMware dropped $3, Citrix dropped $2.50 and Microsoft dropped $1.45.


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