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Britain suffers delayed IT spending caused by Brexit

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August 3, 2016

It looks like Britain's Arrow Electronics Enterprise division was negatively affected by delayed spending among various IT customers following the outcome of the Brexit vote, the distributor’s CFO stated late yeaterday.

Chris Stansbury estimated that late purchases and weakening of accounts after the June 24 vote negatively impacted sales by approximately $40 million.

He added that this was due to the “uncertainty caused by the Brexit vote and the unfortunate timing falling just before the last week of the quarter”. Arrow’s second quarter of fiscal 2017 ended July 2nd.

Naturally, those sales should show up at some point said CEO Michael Long, and that this was just a “temporary road bump”.

According to various IT industry observers, the Brexit vote to leave the EU dampened 2016's IT spending forecasts. Gartner downgraded the value of technology sales in Britain by $4.6 billion and Canalys cut projections by 10 percent.

Technology vendors have leapt on the currency swing-- British sterling is down versus the US dollar by 15 percent in the last 12 months, and managed to push up local price lists for resellers.

That will most likely force IT customers to rethink budgets or spending plans over the next quarter or two.

Overall, the Brexit topic was largely the only bad element on an otherwise healthy trading period for Arrow, as sales edged closer to the record $6 billion mark, up two percent year-on-year to $5.97 billion.

The Global Components division was up four percent to $3.83 billion and Enterprise Computing Solutions came in flat at $2.14 billion, the latter driven by infrastructure hardware, big data analytics and security.

Operating profit was $223.6 million versus $206.9 million and net profit was $134 million compared to $124.6 million the previous quarter.

Source: Arrow Electronics Inc.

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