Top Management Change at Avnet (AVT)

Avnet, Inc. (AVT) recently came out with its succession plan for the Chairman of the Board after current Chairman Roy Vallee announced his decision to retire and not to run for re-election.

Vallee served as the Chairman of Avnet for 14 years and another 13 years as the Chief Executive Officer.

In response, Avnet plans to select current board member William Schumann III to serve as the non-executive chairman, subject to his re-election as an Avnet board member by shareholders at its annual meeting in November.

Prior to joining Avnet’s Board in February 2010, Schumann served as the Executive Vice President of FMC Technologies, Inc. Schumann served in a variety of financial and operational leadership positions in FMC Corporation since joining in 1981. He was the Senior Vice President and Chief Financial Officer prior to the creation of FMC Technologies in 2001. Schumann served as the Chief Financial Officer at FMC Technologies from 2001 until he retired from his position in November 2011.

It remains to be seen how a change in management helps Avnet to march forward in an uncertain macroeconomic environment.

Earlier, Avnet reported sales of $6.31 billion in the fourth quarter of fiscal 2012, down 8.8% year over year. Although revenues in the quarter were within management’s guidance range of $6.30 billion to $6.90 billion, it failed to meet Zacks Consensus Estimate of $6.54 billion.

Avnet ported an adjusted net income of $145.3 million or 99 cents per share in the fourth quarter of fiscal 2012, down from a net income of $189.4 million or $1.22 per share in the year-ago quarter and an adjusted net income of $151.6 million or $1.03 per share in the previous quarter.

Reported earnings lagged the Zacks Consensus Estimate of $1.08 per share as well as management’s guidance range of $1.05 – $1.13 per share. Earnings estimates have moved downward after the company reported its fourth quarter results.

Hence, we continue to maintain a Neutral recommendation on Avnet, Inc. However, we currently have a Zacks #4 Rank on the stock, which translates into a short-term rating of Sell.