Tech Data puts former J.D. Edwards chief Dutkowsky in CEO seat

Former IBM, J.D. Edwards and EMC executive Robert Dutkowsky will be the man who will try to lead Tech Data Corp. out of its financial difficulties.

This morning the distributor announced Dutkowsky will be its next chief executive officer and member of the board starting Oct. 2.

He replaces CEO Steven Raymund, who led the company his father founded in 1974 for the last 20 years. Raymund is staying as non-executive chairman of the board.

“Bob possesses a highly successful track record in driving sales growth and leading companies through periods of change and development,” Raymund said in a news release. “His sales expertise, business acumen and leadership ability in the areas of distribution and product development are an enormous addition to our company.

“I am very pleased that Bob is joining Tech Data, and in speaking on behalf of our entire organization, we look forward to his contributions as we work to grow our company and deliver improved returns to our shareholders.”

“I am excited to be a part of an extremely dynamic and successful organization,” said Dutkowsky.

“Steve and the talented management at Tech Data have built an industry leading IT distribution company with an extensive global reach, an exceptional team of employees and highly focused operating fundamentals. I look forward to working with the entire team at Tech Data, the customers and business partners, as we further Tech Data’s position as an industry leader worldwide.”

Tech Data Canada president Rick Reid has never met Dutkowsky, but believes he will fit in well. “Certainly reading his credentials, it wouldn’t be hard to make that leap of faith that he does have that background in our business,” Reid said in an interview. “We’re very excited about it.”

“I talked to a number of (Tech Data) people in the U.S. that went through the interview process with him and they were very impressed with his qualities and personality, his demeanor.”

Dutkowsky, 51, joins the company at a difficult time. It recorded a net loss of US$155.5 million for the second quarter ended July 31. This compares to a net loss of US$59.4 million for the same period in 2005. The results included a US$136.1 million goodwill loss, based mainly in Europe, along with a further US$8.4 million charge to increase the valuation allowance for certain deferred tax assets.

Net sales for the quarter were US$4.9 billion, an increase of 2.7 per cent from $4.8 billion in the second quarter of fiscal 2006 and flat sequentially as compared to the first quarter of the current fiscal year.

Meanwhile worldwide sales at arch-rival Ingram Micro hit the highest second-quarter level in company history, reaching US$7.40 billion, an 8-percent increase from US$6.84 billion in the prior-year period. Second-quarter net income increased 29 percent to $53.8 million, or $0.32 per diluted share.

At the time Tech Data’s results were released, Raymund described his company’s second quarter as “challenging, as difficult market conditions in EMEA (Europe, Middle East and Africa), coupled with distractions from our restructuring initiatives slowed our progress in delivering improved profitability.

“While it will take longer than previously anticipated to reach an acceptable level of profitability in EMEA, our efforts to date have been productive — strengthening our foundation for improvement. We will continue to invest in programs that optimize our sales, pricing and inventory management practices and support our long-term potential in both the Americas and EMEA.”

“Running a distribution company is a challenge,” Jim Estill, CEO of Synnex Canada, said of the appointment. ” The margin for error is low because the margins are low. It is all about the little things.”

Dutkowsky joins Tech Data from Egenera, Inc., a utility computing company, where he has been chairman, president and chief executive officer since February, 2004.

His career in the information technology industry began in 1977 at IBM where he held many sales, marketing and executive management positions including vice-president, distribution IBM Asia/Pacific and vice-president, worldwide sales and marketing for the RS/6000 line. During his 20-year IBM tenure, Dutkowsky held an assignment working directly for former IBM chief executive officer Lou Gerstner.

In 1997, Dutkowsky joined EMC Corp. as executive vice president, markets and channels; he was later promoted to president of is Data General division.

In 2000, he was appointed chairman, president and chief executive officer of GenRad, Inc. and guided the publicly traded company through its merger with Teradyne. In 2002 Dutkowsky was named president and chief executive officer of J.D. Edwards & Co. Inc., and, and became chairman three months later. He left J.D. Edwards in 2004 at the conclusion of the company’s integration with PeopleSoft.

Reid doesn’t expect Dutkowsky will shake things up here, in part because “TDC is a very successful subsidiary.”

“The CEO of a $21 billion company does a lot of direction-setting, planning, strategic thinking,” said Reid. “The day-to-day operations, he won’t have a lot of involvement with Tech Data Canada. We account for less than 10 per cent of his overall business. He has bigger things to concern himself with than Tech Data Canada.”

Observers have noted that Dutkowsky doesn’t have much experience running low margin companies like distributors. That was dismissed by Reid.

”That’s something that smart people can learn very quickly. He’s surrounded by 9,000 fellow employees who have a lot of experience in running a company that runs on low margins, so I expect he’ll be taught in a hurry what that’s all about.”

Comment: info@itbusiness.ca

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