Fitch: Reduction in Global IT Spending Increases Risk to U.S. IT Distributors' Credit Profiles

NEW YORK--(Business Wire)--
Fitch Ratings expects that the ongoing reduction in global IT spending will
further deteriorate operating profiles for U.S. IT distributors and could lead
to weakened credit profiles. According to a new special report issued today,
Fitch believes that while the rate of decline could moderate from levels the
industry experienced in first quarter 2009 (1Q09), double-digit year-over-year
sales declines will continue into the second half of 2009. Declines are likely
to continue to be driven by weak demand, compounded by reduced access to credit
and likely rising failures in the small and medium business space.

"Our outlook for the IT distributors remains Negative," said Melissa Link-Cohen,
Director at Fitch Ratings. "If declining sales result in significant and
prolonged operating margin deterioration, negative rating actions could occur.
Ratings pressures will also occur for companies that use cash from working
capital reductions for acquisitions or share buybacks."

Despite lower profitability, Fitch expects substantial cash generation in 2009
as lower sales drive reductions in working capital needs. Nonetheless, there is
reduced flexibility for share repurchases and acquisitions under current
ratings, given lower profitability, as well as the expectation of future cash
needs to fund increased working capital once demand turns stronger. Fitch
expects that liquidity preservation will remain a focus, thereby reducing this
event risk.

The special report, titled 'Distribute I.T. - Information Technology
Distributors Industry Review and Outlook' includes analyses of industry
operating performance, credit and liquidity, key industry trends and
developments and individual credit and financial profiles of Fitch rated IT
distributors. The report is available on Fitch's website at
www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, New York
Melissa Link-Cohen, CFA, +1-212-908-0611
Nick P. Nilarp, CFA, +1-212-908-0649
Cindy Stoller, +1-212-908-0526
(Media Relations)
cindy.stoller@fitchratings.com

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