Avnet (AVT) Eyes IoT Expansion With Acquisition of Witekio

Avnet AVT recently inked an agreement to acquire software and embedded systems provider Witekio, in a bid to expand and enhance its end-to-end IoT strategy.

Witekio’s solutions help developers address the challenges that crop up while developing IoT solutions. The acquisition is expected to close by the end of 2019, subject to regulatory approval.

If the buyout materializes, it will add more capabilities in embedded software, edge computing and security to Avnet’s IoT business. The deal will also bolster Avnet’s focus on simplifying the process of launching IoT products for client companies, time and cost efficiently.

Moreover, Avnet will be able to extend its reach to Witekio’s customers, who are located across France, the United States, the United Kingdom and Germany.

The combination of Avnet and Witekio’s technologies will help the former deliver a wholesome hardware, software, cloud and middleware solution that provides insights based on the customer’s specific business needs.

Avnet, Inc. Price and Consensus

Avnet, Inc. Price and Consensus

Avnet, Inc. price-consensus-chart | Avnet, Inc. Quote

Focus on IoT

Over the past couple of years, Avnet has been trying to expand its presence in the IoT space. The company’s IoT partnerships with the likes of AT&T T, as well as acquisitions, such as Dragon Innovation, Premier Farnell, Hackster.io and Softweb enhanced its capabilities in this space.

Moreover, Avnet recently tied up with software company Trusted Objects to provide comprehensive industrial IoT solution for customers with low-power IoT devices.

This apart, early in 2018, Avnet launched a cloud-based software platform and a host of connectivity solutions to assist organizations develop IoT-related products and services. Also, it announced a Sound Capture Platform in collaboration with Aaware to improve sound capturing performance for AI applications in smart home, robotics and IIoT markets.

Moreover, the company’s investment in Hanhaa, a U.K.-based IoT innovations provider, strengthened its footprint in the domain.

In the last reported quarter, Avnet’s IoT solutions witnessed rapid expansion of revenue pipeline as a result of its initiatives in the space, and deal wins in areas such as retail and healthcare. The pipeline reached $630 million, up 5% sequentially. Also, its IoT strategy benefited from its partnership with Microsoft MSFT.

Competition Rife in IoT Space

Notably, the scope of IoT has made this space more lucrative for organizations. Per a Fortune Business Insights report, the global IoT market is expected to hit $1.1 trillion by 2026 at a CAGR of 24.7% between 2018 and 2026.    

Efforts of other companies in terms of IoT are also increasing. For instance, Cisco Systems CSCO allows its customers to extend connectivity in the toughest of environments and conditions, securely from the enterprise to the IoT Edge.

Earlier this year, Microsoft pledged to spend $5 billion over the next four years on IoT, and is already partnering with smaller companies in the space.

Nonetheless, we expect Avnet’s efforts to boost its presence in the IoT space to revive its stock.

It carries a Zacks Rank #5 (Strong Sell), at present.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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