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Tech Industry

Online reseller CDW thriving

The company has now posted 22 consecutive quarters of sales growth as it records a net income increase of 32 percent to $65.8 million in the fourth quarter.

CDW, one of the largest online resellers of computer equipment, posted record earnings in the fourth quarter, as it continues to thrive on the Net.

CDW said that it has now posted 22 consecutive quarters of sales growth as it recorded a net income increase of 32 percent to $65.8 million, a 29 percent increase over $51million reported in 1997.

CDW sells computer hardware from major brands such as Compaq Computer, IBM, Hewlett-Packard, Sony, and Apple Computer. It also sells software, networking equipment, and computer books.

Net sales for the fourth quarter increased 36 percent to $477.2 million from $350.7 million in the same period of 1997. Net income for the quarter rose 32 percent to $18.3 million from $13.9 million in the fourth quarter of 1997. Diluted earnings per share increased 31 percent to $0.84 in the fourth quarter of 1998 from $0.64 in the same period of 1997, CDW said.

"Our expanded sales force successfully met strong demand from our commercial accounts, which comprise 88 percent of our net sales," said Michael P. Krasny, chief executive officer, in a statement.

CDW said that networking and communication products and desktop computers "both achieved sales growth rates slightly in excess of 50 percent in the fourth quarter of 1998. Desktop computer sales increased approximately 62 percent. The other fastest growing product categories, based on the percentage increase in dollar sales over the fourth quarter of 1997, were software, printers and video products."

Notebook computers, the largest product category at 20 percent of net sales, increased approximately 17 percent in net sales dollars over the fourth quarter of 1997.

"An increasingly important business growth driver is our Web site. In the fourth quarter, the number of unassisted Web sales grew to just over $20 million, an increase of 208 percent over the fourth quarter of 1997 and 28 percent over the third quarter of 1998," CDW said in a statement.

Gross profit margin was 12.7 percent of net sales in the fourth quarter of 1998, versus 13.2 percent in the prior year quarter. The 1998 fourth quarter gross profit margin percentage is consistent with the level achieved in the third quarter of 1998.

CDW added that "gross profit as a percentage of net sales may vary on a quarterly basis based upon vendor support programs, including inventory price protection policies, product mix, pricing strategies, market conditions and other factors. As a result, there is no certainty that the Company will be able to sustain the gross profit margin levels achieved in recent quarters."