Systemax's Strong Q1 Sparks Stock Surge

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Wall Street rewarded Systemax Inc. with a strong run-up in its stock price during May following solid first-quarter results announced at the start of the month.

After market close May 1, the Port Washington, NY, computer marketer reported net sales of $426.5 million, up 3.4 percent from $412.3 million in the year-ago quarter, as sales in North America rose marginally while European sales climbed 8 percent. Also, income from operations increased to $8.6 million from $985,000 during the year-ago period.

After closing at $2.34 on May 1, the stock opened at $2.60 the next day, reached a high of $3.35 and closed at $3.10. May 5 saw an opening price of $3.40, a high of $3.75 and a close at $3.50, followed a week later by a new 52-week high of $4.21.

It closed at $3.60 on May 27, concluding a month-long run that began April 28 when the price finished at $2.30 as its value skyrocketed 56.52 percent in that time. Its 52-week range includes a low of $1.15.

Steve Goldschein, Systemax's senior vice president and chief financial officer, had no projection for the stock's future.

"We're interested in running our business and making a profit," he said.

He explained the company's success.

"We make sure that we're exploring all the avenues of business," he said. "This means outbound marketing, the Web -- which is becoming more of the business -- and inbound marketing that comes from the catalog, which is becoming less and less important with the growing importance of the Web. With the Web you can send out e-mails to announce sales to existing customers and follow up with people who have made inquiries."

He also noted that in the past few years the company has sold PCs through infomercials.

"Even if demand for PCs is down, we also sell peripheral items including supplies, media software, networking equipment, printers, scanners [and] CD writers," he said. "We sell everything. To [be successful], you need to deliver high service levels to your customers."

The Fortune 1000 company is a direct marketer of brand-name and private-label products including personal desktop computers, notebook computers, computer-related products and industrial products in North America and Europe. It assembles its own PCs and sells them under the Systemax, Tiger and Ultra trademarks.

It also markets and sells computers manufactured by Hewlett-Packard Co., IBM Corp. and others. Computers and computer-related products accounted for 90 percent of its net sales in 2002. It markets its products through a system of full-color direct mail catalogs, proprietary e-commerce Internet sites and personalized relationship marketing to businesses, educational organizations and government agencies.


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