Synnex Rallies on Plans to Split Into Two

Synnex will divide into a concern focusing on the company's core IT distribution business and another focusing on customer experience.
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Shares of Synnex  (SNX) - Get Report soared Friday after the business services company announced it was separating into two corporations and released earnings that exceeded analysts’ expectations.

As for the new companies, one will be Synnex Technology Solutions, focusing on what has been Synnex’s core business: information technology distribution. The new concern will generate annual revenue of about $19 billion and remain one of the top three IT distributors in the Americas and Japan, Synnex said.

The second company is Concentrix, which will focus on customer experience in eight industries, including technology, financial services and media. Concentrix serves more than 125 of the Global Fortune 200 companies and has annual revenue of about $4.7 billion, Synnex said.

"The spinoff will provide each company with sharper strategic and managerial focus and enable Synnex shareholders to own and value each business separately,” Dennis Polk, CEO of Fremont, Calif.-based Synnex, said in a statement. Both companies will be publicly listed.

As for earnings, Synnex reported net income of $176 million, or $3.41 a share, for the fiscal fourth quarter, jumping from $115.2 million, or $2.45 a share, in the year-earlier period.

Adjusted earnings were $4.26 a share in the latest quarter. Revenue surged 19% to $6.58 billion from $5.54 billion a year ago.

Analysts estimated adjusted earnings of $3.61 a share on revenue of $5.99 billion.

Synnex was at $145.98, up 13.3%, in trading Friday. Shares of Synnex have gained 48% in the last year, compared to a 27% increase for the S&P 500 index.