Rethinking A CDW Re-IPO, The Case For Growth

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If you are a computer and technology buyer, then chances are high that you know CDW. The company is mostly online and sells computers, monitors, networking gear, software, and a myriad of other technology products to companies, organizations, and individuals. The private equity giants of Madison Dearborn Partners and Providence Equity Partners took this company private in a leveraged buyout for more than $7 billion back in 2007 during the private equity bubble. Now CDW is reportedly getting ready to come public again in an initial public offering.

While we would tend to be skeptical of a private equity re-IPO, this is a company which probably needs to be public now. It is also still managing to grow sales and earnings. It is a valuable destination to buy equipment for many customers. We can also make the argument that being public will also act as a form of near-free advertising.

CDW managed to grow and it may be just one of the other large thorns in the side of Best Buy Co. (NYSE: BBY) while simultaneously competing against Inc. (NASDAQ: AMZN). For the full year of 2012, its net sales rose 5.5% from 2011 to $10.1 billion. Its gross profit rose 5.4% in the same period to $1.67 billion. Even its quarterly earnings did better as sales were up 4.9% year over year to $2.6 billion and its gross profit rose 3.2% to $425.5 million for the same period.

We would go back in time as well and look at say fiscal year 2010. That was a record sales year with 22.9% sales growth over 2009 to $8.8 billion.

We saw a quote from the company saying, “Our diverse channel portfolio helped deliver an overall increase in sales to Corporate customers as growth in our Medium and Large business channel offset a slight decline in Small business.” It also showed a reduced debt by saying, ““Over the past five years, our debt less cash has declined by $869 million from $4.60 billion to $3.73 billion.” The company has a stated goal of continuing to profitably outpace market growth and to enhance its financial position in 2013.

Back to that IPO. We have not heard back from the company after just inquiring about the IPO, although it is probably too soon to expect any official word back yet. The most common theme is that the company would raise about $750 million and that Goldman Sachs and J.P. Morgan have been listed among the likely investment bankers.

Here are some supporting articles from around the web: