Avnet numbers offer more proof that business is back

Let’s all get used to hearing this phrase: “revenue was much stronger than we expected.” Avnet’s CEO Roy Vallee said that today regarding the company’s fiscal Q3 numbers and it’s a phrase that’s been uttered by other CEOs, and will be repeated by still more CEOs, throughout this earnings season.

Avnet’s revenue of $6.67 billion was up 40.3% year over year for the quarter ended April 2. The company’s revenue growth during each of the past four quarters has averaged 40% year over year, with profits growing faster than sales.

Why make note of Avnet and not, say, Intel, which last week posted 25% year over year growth for a record of its own and beat expectations? Avnet is a leading distributor, one with an extensive line card that represents a good chuck of the electronics industry’s parts moved through to engineers. Generally speaking, when it and other major distributors do well, parts are moving, designs are being designed, and there’s balance-more or less-in supply and demand. (By the way, Avnet’s closest competitor Arrow also did very well in the most recent quarter and another fellow distributor Digi-Key in March announced that it reached a new sales milestone in 2010.)

Averaged 40% year over year revenue growth in the last four quarters for such a company as Avnet tells me, and I hope many other people, that we are on safer ground than we were at this time last year. While we’re still waiting for jobs to come back, life in the electronics world is becoming more stable.

So why all the cautious statements when it comes to forecasting-Why have to state “revenue was much stronger than we expected”-Why not expect such gains? We’re all still a little uneasy. FUD (fear, uncertainty, and doubt) still lingers in the air post the recent downturn and with natural disasters disrupting the electronics supply chain and demand, no one could be blamed for setting their targets a little low. Shareholders are always happier to see estimates beat instead of missed.

“The Great Recession,” as it’s been called, had industry participants shuttered, shades drawn, staying inside and timid on stepping out into a surprise storm. It’s time to open the windows again, let the air in, and, with caution, venture back out into the risky world. As more and more quarterly numbers come in, especially from segment leaders like Avnet and Intel, FUD dissipates and confidence grows.

Roy stated today and has maintained for a long time now that “technology markets continue to lead the economic recovery.” For previous accounts of that sentiment, see this “Innovation must go on” interview he spoke to EDN for in December 2009, back when FUD was thick and filled the air with the horrible stench of business closures, layoffs, and missed financial marks.

It’s still early in the year and there are always a lot of unknowns, but today’s numbers from Avnet offer more proof that technology markets do, indeed, continue to lead the economic recovery and that growth can be expected.

Do you agree that tech is regaining its stability? What companies are you watching for economic signs, good or bad? Share your thoughts below.