#CDW 's converged infrastructure business grew more than 50 percent in the second quarter, with hyper-converged infrastructure being the main driver behind that standout business. Raw material and product shortages negatively affect the server businesses of many solution providers, but CDW still reported mid-single-digit growth in that business, as it reported a strong second fiscal quarter. The Vernon Hills, Ill.-based company, No. 5 on the CRN Solution Provider 500, revealed that despite persistent memory constraints and shortages, it experienced no supply chain interruptions.  [Related: CDW Launches Standalone Small-Business Practice Focused On E-Commerce, Digital Delivery] Speaking during the company's earnings call on Thursday morning, CEO Thomas Richards said CDW's scale, buying behavior and strong investment in data center resources helped offset the periodic fluctuations of its server business. "The cyclical nature of the server market, with all of the other things going on around it – whether it's virtualization, infrastructure as a service, hyper-converged, which were all strong for us – there are going to be times when I'm going to extend my on-prem server capability, because it doesn't make sense to make a change at this point," Richards said. "That doesn't happen every quarter." CDW's performance in the health care space, meanwhile, saw a 7 percent year-over-year decline due to an unpredictable U.S. political climate, in which members of Congress are at odds over the future of the Affordable Care Act, Medicaid and how health care providers are reimbursed for services. As a result, Richards said, decision-makers at healthcare institutions feel compelled to be careful about money management across the board, including IT spend. "The lack of clarity, especially for the major hospitals, makes it hard," he said. "They're not sure how they're going to be reimbursed. When you're not sure how they're going to be reimbursed, you're going to be cautious on spending." CDW revenue for the second fiscal quarter ended June 30 jumped to $3.99 billion, up 9 percent from last year's second-quarter mark of $3.66 billion. That beat Seeking Alpha's projection by $150 million. Excluding health care, the company reported single-digit or better growth in all of its end markets, including a 19 percent increase in government business – fueled by a new contract with state and local agencies. The company also reported 11 percent growth in its small business dealings and a 9 percent uptick around its corporate business segment. Net income for the quarter was $141 million, or $0.89 a diluted share, an increase of 20 percent from $117.5 million, or $0.70 per share, in the year-ago quarter. On a non-GAAP basis, CDW reported net income of $163 million, or $1.03 diluted a per share, up year-over-year from $156 million. Those numbers fell in line with Seeking Alpha's estimates. Richards addressed the appointment of two recently-created executive positions on the call: chief revenue officer, filled by former SVP International and Chief Legal Officer Christine Leahy, and the expanded role of SVP, commercial and international markets, which was filled by Christina Corley. As CDW has grown, Richards said he wanted to ensure effective strategy execution by enabling executives to "manage smaller," to give the leadership team a complete picture of sellers, customers and the overall organization. "I just want to make sure we're staying a couple steps ahead, and that we're constantly listening and focusing on the front line," Richards said.
