Welcome to the SYNNEX second quarter 2008 earnings conference call. (Operator Instructions) I would now like to introduce your host for today's conference, Ms. Laura Crowley, Director of Investor Relations.

Welcome to the SYNNEX Corporation’s fiscal 2008 second quarter earnings conference call. Joining us on today’s call are Bob Huang, President and Co-Chief Executive Officer, Kevin Murai, Co-Chief Executive Officer, Dennis Polk, Chief Operating Officer, and Thomas Alsborg, Chief Financial Officer. Before we begin I would like to note that the statements on today’s call, which are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements include, but are not limited to, statements regarding our acquisition and integration of New Age Electronics, the seasonality of our business, growth of our consumer electronics division, expectations of our revenues, gross margins, SG&A, net income, earnings per share, work in capital, return on invested capital and our cap cycle, the impact of the general economy on our business, the softness of the market, our IT systems, our growth and profitability, planned liquidity, the benefits of our recent convertible bond offering, future benefits derived from our recent acquisitions and management changes. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in these forward-looking statements. Please refer to today’s press release and the documents filed with the Securities & Exchange Commission, specifically our most recent Form 10-K for more information on some of the risk factors that could cause actual results to differ materially from those discussed in these forward-looking statements. Also, any use of the word per forma refers to figures that are non-GAAP. Additionally this conference call is the property of SYNNEX Corporation and may not be recorded or rebroadcast without specific written permission from the company. Now I would like to turn the call over to Thomas Alsborg for a recap and comments on our financial performance.

I am going to begin by summarizing our results of operations for the quarter, but before I do, I would like to highlight that during the quarter, we acquired substantially all the assets of New Age Electronics, a U.S. consumer electronics distribution company. New Age had over $900 million in 2007 and though not all of this is expected to be retained, New Age is one of the largest acquisitions SYNNEX has undertaken. The transaction closed on April 1, contributing approximately nine weeks of operating results to our quarter. With regard to the new business, our primary focus for the quarter was to ensure that we quickly and successful New Age into SYNNEX with minimal impact to our customer and our vendors. I’m pleased to tell you that we have now substantially completed this. Although the incurred incremental cost to expedite the integration the acquisition was modestly accretive to the quarter as expected. Finally, I also ask our listeners to keep in mind that on May 31 our balance sheet included substantially all of the assets and liabilities of New Age, while our P&L had only the nine weeks of New Age operations contribution. This of course will skew our calculated results for the balance sheet metrics such as our cash-to-cash cycle and return on invested capital. I’ll explain this more during the presentation of our results. Now I’d like to summarize our result of operations for the quarter. Revenues for the second quarter of 2008 were $1.88 billion an 11% increase over the second quarter of 2007 and a 7% increase sequentially. These revenue results are in line with our Q2 guidance which was increased in April on the first to reflect the expected contribution from the New Age acquisition. Our second quarter net income was $18.5 million or…

First, I am very pleased to have Kevin Murai on board at SYNNEX in position of Co-CEO. As we announced back in March 31, I plan to retire from the President and CEO position at the end of our fiscal year. Pending board approval, I will become Chairman of the Board at SYNNEX and Kevin Murai will then retain the sole CEO role. In the meantime, as Co-CEOs, Kevin and I are working on a smooth transition. In the short period of time that Kevin has been with SYNNEX, I am very impressed with how quickly he has taken over the day-to-day operations of managing our core business in N.A. This has allowed me to focus more on my time in Asia on our BPO businesses. I am confident that the company is in very capable hands with Kevin at the helm. Kevin is a seasoned with close to 20 years of direct distribution expertise and he’s well known throughout the IT industries. In partnership with Kevin, I look forward to building upon SYNNEX successes and achieving our goals. I would just like to take a moment to highlight a few major accomplishments for the quarter and then I’ll turn the call over to Kevin. We continue to make way straight in the diversification of our business model in our second quarter. GP of 1.46 was slightly lower sequentially due to the additional expenses as noted by Thomas earlier. I’m grateful to all of our employees worldwide for the hard work and dedication continues to meet and exceed expectations. I’m proud to say the completion of the second quarter of 2008 marks our 84th consecutive quarter of profitability. As the founder of SYNNEX, I have experienced a number of achievements and milestones over the 27 years that SYNNEX has been in business. I’m always pleased by the tremendous efforts of our employees even during soft economic times to figure out ways to improve our company and accomplish our goals. SYNNEX is a company that is excellent in execution and this quarter is not exception. Once again, we exceeded our net income in EPS guidance. SYNNEX has evolved into a leading business process services company. Our 2007 BPO investments are performing as a plan and will continue to look for ways to create values to our shareholders. Also, as Thomas mentioned, we closed on our acquisition of New Age Electronics and I’m impressed with the efforts of the integration team. We look forward to leveraging the combined operation to grow our market share and create additional value for our customers. Again, I would like to welcome the New Age associates to the SYNNEX family. Now I would like to turn the call over to Kevin for his prospective on the business and comments on the quarterly results and forecast.

I’m delighted to be joining the SYNNEX team at such a remarkable time in the history of the company. Having been in the distribution industry for many years now, I’ve always been impressed with how SYNNEX has consistently managed and accomplished its goals. Having been on board for three months, I see the ability to execute and deliver comes from a very seasoned and impressive senior leadership team as well as our dedicated employees worldwide; however, the vision and strategy came from Bob Huang. I am honored and would like to thank Bob and the board of directors for this tremendous opportunity. In my first 90 days with the company, I’ve spoken with a number of customers, vendors, employees, and members of Wall Street about SYNNEX. The initial questions have been consistent. What are your first impressions of SYNNEX? What allows SYNNEX to compete so favorable against others? And my answers are always the same. First, I’ve been most impressed with the associates of SYNNEX. The SYNNEX people know this business well. They know how to develop great longstanding relationships and are extremely efficient and cost effective in managing the business. It’s a culture of cooperation, hard work, dedication, and an undeniable can-do attitude. Second, as a newcomer to SYNNEX, I experience firsthand, the power of SYNNEX’s IT systems. In my opinion, these systems are best in class and a true competitive advantage. SYNNEX is a very well run company that is nimble and efficient, but with any well run organization, we are continually looking for ways to improve our operating efficiencies and leverage our various entities to create additional value for our OEM partners, customers, and investors. As for my immediate focus, initially I’m concentrating on two key areas. First, not withstanding our very solid execution, I’m focusing on…

Let’s go ahead and open the call for questions, please.

(Operator Instructions) Your first question comes from Richard Kugele - Needham & Company. Richard Kugele - Needham & Company: First, just to make sure I understand the math right, we had included New Age, but if you back that out, can you give us a sense on how much New Age contributed at the gross margin level in the quarter.

We are not breaking out New Age. New Age has been integrated into our business and certainly won’t be run as a separate division, but having said that, some of the comments that we shared upon acquisition is that the overall margin profile of New Age is similar to that of our US operations and when I say that I particular focus on the operating margin. The revenue profile of New Age last year was about $900 million or a little over that and we have two months of those operations in our results this quarter, but we should not be expecting all of that revenue from 2007 necessarily carried forward into the post acquisition year. Richard Kugele - Needham & Company: Kevin, to follow up on some of your comments there on the market. Have you seen the aggressive pricing or at least at certain customers the pricing pressures there, has that also materially continued in August or are you assuming that it will and you’re trying to guide for that?

Through the quarter, I would tell you that the overall pricing environment has remained competitive, which we do operate in a competitive environment, I would tell you that we have very good pricing discipline and as a result we’re able to continue to maintain our gross margins and over time improve our gross margins and we’re also willing to walk away from unprofitable business. In the market, we did see some competitive pressures but primarily on some of the larger deals. When you look at the makeup of our business, the SMB market is a larger component of SYNNEX’s business than you might see with some others. So as a result, we’re a little bit less dependant on some of the larger deals than others would be. So we view those are opportunities that we would selectively either move on our back away from. Richard Kugele - Needham & Company: I know that you don’t like to get into specifics on this, but judging by my conversations with investors, I think some color would be helpful. You’ve made so many acquisitions over the years recently and have really moved away from competing against the other broad line distributors on a straight distribution model, but it gets difficult for investors to go I understand the various segments of the business between the BPO side and the enterprise part and the EMS side and now the consumer element, can you give us a sense what you see 12 – 18 months out on what the business mix should be so people could actually try and at least directionally come up with what a model would look like and what matters to you and what should not affect the model as much.

You’re right. Right now we don’t break out the various business divisions that we have currently. Right now all the business units are contributing to our increased profitable, which is a very key focus of ours. As these businesses mature, take a look at breaking out ones that exceed the certain thresholds that are out there from accounting disclosure standpoint, which is typically around 10% either top or bottom line. So as we get closer to that, we’ll take a look at which units are best to break out. So at this point in time, that’s where we at with regards to our business segments.

Your next question comes from Bob Guindyke - Raymond James Thomas, you mentioned you incurred incremental costs in the quarter for the New Age acquisition. Could you quantify how much those costs were?

When I was describing our SG&A change, I mentioned we have the incremental SG&A dollars associated with the business itself, but then we also talked about the fact that there would be integration costs that are one time in nature in the fact that once the company is integrated they’re gone, and during the quarter I would say some of all those costs is a little less than a million dollars.

On your discussion of work in capital and I understand how New Age impacts that, but even backing out New Age from the discussion, you’re still up approximately five days on a cash conversion cycle metrics versus a year ago and keep trending higher on a year-over-year basis. Just wondering if we might see that stabilize in the near term and perhaps work its way back down to more historical levels.

Indeed. I think that’s a good expectation. I would say you would expect to see it stabilize and trend downward. I would note that they’re always moving pieces of the puzzle. For example, one of the comments I believe I made was that this quarter we took advantage of some new early paid discount opportunities to us to the extent that we would choose to do that and find it economical to do that on a go-forward basis. You might see our days payable outstanding one or two days shorter than it would otherwise be, but for those kind of opportunities which we’ve made conscious business decisions about, you will see our work in capital to trend back down again.

What sort of impact did the BPO acquisition have on your work in capital metrics.

Our BPO business is not really inventory intensive at all, so you’re not going to see anything there. Keep in mind though that these businesses are well less than 10% of our revenue. In fact, some of our BPO businesses are just a few percentage points of our total revenue. Our impact from areas like DSO and DPO would pretty much be deminimized for the overall picture. So the cash-to-cash cycle metrics that we share with you are by and large driven nearly exclusively by our distribution business.

If we look at the year-over-year operating margin improvement in the business. When we look at the improvement, would you say that the core business is also seeing operating margin improvement?

No, I’m glad you asked that question, Bob, because I wouldn’t want you to think that the operating margin was driven exclusively by our BPO businesses. We are executing very well on the distribution side of the business. I would characterize there’s really three drivers. I would say the core distribution business, which includes the areas of just better execution as well as growth in product segment and adjacent markets like the consumer electronics business. That is one main driver of our gross margin improvement. A second one has to do with the acquisitions that we’ve made that are in the distribution space. An example of which I referred to was our consumer electronics business in Canada tends to have higher gross margins. That also has helped us as we’ve gone along, are subject to seasonality. Finally, the BPO business that we have has also played a role, because while that business represents just a few percentage points of our total revenue, the gross margins on that business of course are substantially higher than distribution business. So we have really three main drivers of the gross margin expansion, which is what gives us confidence in being able to continue to grow both the gross margins and more importantly our operating margins in the coming quarters and years.

Your next question comes from Ananda Baruah - Banc of America.

Could you comment on the linearity of the quarter? Did things kind of come in more normal this quarter than they did last quarter? Is pricing pressure you’re seeing, is this incremental and more macro driven?

First on the linearity, it was pretty much as expected through the quarter and the only thing I would add to that is when we provide our third quarter guidance, it’s certainly based on our view of current market conditions too. On the second point, I would just say that the pricing environment is probably more of what we would expect in managing our overall business in general. It was probably some incremental pressure on some of the larger deals, but overall, as we look at the broad market that we serve, it’s something that we’re used to dealing with every day and in fact I would also tell you that as we continue to compete in small and medium business market, price is not the only factor. I would tell you price is probably not even the most important factor. Our ability to execute, having inventory that our customers are looking for, and having inventory at the places the customer needs it are probably more important factors and that’s where we do very well.

As we think about New Age and the impact after this fiscal year, because I guess you’re giving guidance for the remainder of the year, but as we go into 2009, what’s the best way to think of what the potential impact can be. I mean we can kind of take the $900 mil and then chew it down some from ’07 and add some sort of below seasonal growth rate for ’09 assuming consumer electronic revenue demands will be a little weak, but as far as integration costs and moving through the next couple of quarters and then what the overall margin impact will be. Can you give us some clarification around the comments you made about getting back to minimal margins this quarter and what that might look like quarter after that?

I’ll take the New Age portion and kick it back to Thomas or Kevin on the margin side overall. As far as New Age is concerned, it’s really a two-phased process here. Phase 1 is to get the company integrated onto our system and working within our operations very quickly and that’s what we did. When that happens, we also go through the analysis of the revenue, making sure we’re only taking on profitable business, and we’re doing that as well right now. We should be through this process within the next two to three months. So at that point, we really have a business that we can start to leverage and really get the benefit of the acquisition. As we noted when we acquired the company, a substantial portion of its revenue came from HP. So we have a great set of customers and vendors from the New Age acquisition, but really only selling one product set to them. So we now have the opportunity to sell complimentary products and really leverage that business and that’s what will drive the revenue growth from that part of the business when we look out to the latter half of ’08 and into ’09.

Dennis, when will the expiration process be complete? What you generate for the balance of ’08, is it safe to assume that’s going to be more or less the platform as you go into ’09?

As far as the integration again, we’re substantially complete. We’re still doing some polishing right now. We do expect to get some synergy and leverage benefits on the revenue line before the end of the year and take those into ’09.

So what you’re saying is you’ve already gone in and decided whatever business you’re going to walk away from and you’ve already decided upon that?

Yes, we’re basically at that point at this point in time.

Then the margins?

What we’re referring to, when we look at our operating margins, because of incremental costs that we incurred for integrating the business, that had some slight downward pressure on operating margins, but as we’ve pretty much completed that for the most part, moving forward, we would expect our overall operating margins to return to a more normal level.

And the one million dollar cost for this quarter from New Age, can you step through, there were two parts of it I believe?

I would tell you though that probably half of the cost had to do with personnel changes as we’ve integrated, of course, there are synergistic opportunities related to back office operations and so forth and so probably close to half of those costs were related to that and then there’s a fair amount of travel costs and just getting our teams together and working so it’s just truly integration in terms of expenses related to getting the teams together.

No, I agree with that. I do want to emphasize that the team we have now at New Age is a very experienced and has a deep amount of customer and vendor knowledge and relationships in the CE channel and we really are pleased with the folks that have joined the combined SYNNEX now and we really look forward to leveraging them and moving forward.

Your next question comes from Richard Gardner - Citigroup. Richard Gardner – Citigroup: Thomas, was hoping you could give us a sense of what the currency tailwind was during the quarter. With almost 20% of the business from Canada and the strength that we saw in the Canadian dollar, we had calculated at least a couple percentage points of benefit there. Secondly, I was hoping to get a little more color. Kevin, when you talked about price aggression in large deals, are we talking about larger customers or large deals that are bid out to the entire quarter and how frequently is there an opportunity for that type of pricing to change? Is it negotiated for the entire quarter or is it negotiated every month? When can we expect improvement there?

Richard, I think I’ll answer your second question first and then get back to Thomas on that. So you’re right. I mean there are many different kinds of large business so to speak out there. What I was specifically referring to though were more of the larger one time deal and the larger one time deals, there are some bars that do focus on certain segments of the enterprise. I have access to that as well as some of the more traditional resellers that are enterprise only. So that’s kind of the segment that was referring to.

So we’re not talking about things that are negotiated for an entire quarter. We’re talking about deals that just get negotiated periodically I guess.

Yes, that’s correct.

To your question on the effects and impact for Canada, the impact to our overall business or revenue as a result of the effects was I think more nominal than you calculated, Rich. I think it’s closer to a one percentage range than a few.

Great. If I could follow up with one more. I think on the last call you did cite some slow down in US small to midsize business toward the back half of the first fiscal quarter and on this particular call you mentioned that US small to midsize businesses at least a relative bright spot. Have you actually seen improvement in US SMB or would you characterize it as pretty stable versus what you saw last quarter?

I think the best way to characterize it is stable. I would tell you in addition to that though, Rich, softness in demand is pretty much across the board right now. The comments that the company made earlier were on I guess growth in SMB that had not been as strong as we had seen historically and that’s really what that comment was referring to. It still remains about in the same place where it was before, but it’s relatively stable and it’s still for us an opportunity for growth.

Your next question comes from Rich Kugele - Needham & Company. Richard Kugele - Needham & Company: Thomas, obviously the inventory had to go up with New Age, but do you expect that to come down a little bit or is this kind of the new go forward rate?

No. So one of the points I was making, Rich, was that we only have two months of operation. I guess you’re talking about an absolute dollar basis, excuse me. Richard Kugele - Needham & Company: Yes, the exiting numbers, the full amount.

You should see a downward trend in that. Richard Kugele - Needham & Company: The convert is not dilutive until the stock gets north of $29, correct?

That is correct. Richard Kugele - Needham & Company: And the dilution north of that point then would be something in the $.06 cent range?

No, that would be I think much too high. Once it goes beyond that number, it depends of course one major variable factor, which is how high above $29.42 it goes, but keep in mind my note that our intent is to pay back the principle amount with cash and so therefore the dilutive impact and maybe that’s where I think you’re going with this. You probably haven’t factored that in. The dilutive impact is just shares issued for the amount of the bonds that are in value above the principle. It gets to be a little bit complicated math, but just from an accounting standpoint, if you want me to walk through it with you offline, I’ll be glad to do that.

Your next question comes from Ananda Baruah - Banc of America.

One quick last follow-up on the pricing. I just want to make sure that we understand what the spirit of the comments around the aggressive pricing and sort of high end deals really is, because for US competitors, I think it has more of an impact. Kevin, for you guys, is it something that is relatively I don’t want to say insignificant, but because that portion of your business is relatively insignificant, we should expect that to have a material impact, all things being equal on your revenue and on your margins, but you’re matching it because it is out there? I just want to make sure that I’m seeing the spirit of the comments.

Kind of in my own words what I would tell you then, Ananda, is number one date of point is the majority of your distribution business is in SMB. SMB tends to have more stable demands. Pricing is competitive, but not a whole lot different than what we’ve seen in the past. That’s what we manage every single day in our business. In terms of just incremental business and larger deals, that’s where we’ve seen a little bit more competitive pricing and there we’re always been able to kind of pick and choose the business that we wanted to take and the business that we didn’t. So I mean I would tell you overall that it’s going to have an effect on us that’s going to be less than what you might see with some others.

Your next question comes from Aaron Burnham - Thomas Weisel Partners. Aaron Burnham – Thomas Weisel Partners: We touched on the demand in pricing, I wanted to touch on the BPO business. You mentioned briefly that you expanded that business, one of the reasons for the headcount going up, but when should we expect the headcount to go up further since you have expanded the BPO business pretty nicely in the past few months. Should we expect the headcount to go up and also as a result, should we expect the SG&A to pick up significantly over the next few months because of that?

Aaron, so within our BPO business, as you gathered, they are more labor intensive and this is where most of the business is on the call and technical support area. As we continue to expand those operations and I think we’ve mentioned in the past that the demand for our BPO business has been very good out of the Philippines and we are expanding and opening two new facilities there. So as we continue to expand that business both within the Philippines about outside the Philippines we’re going to be adding new people to provide that technical support and that’s where the headcount is coming from. Keep in mind that this headcount is not full-time headcount, but it’s the nature of this kind of business is that you have people who are kind of part-time hourly employees, if you will. Then as far as the SG&A goes, kind of back to an earlier question that Dennis answered, we do expect that our BPO business will grow at an even faster pace than our very healthy distribution business, which of course has been and continues to outgrow the distribution channel. Our BPO business being that it is outgrowing our distribution business over time will become a more significant part of our business and as Dennis commented will break it out. Part of the reason that we would break it out is because as it becomes more significant, the profile of that business is different. We talked in the past about the fact that the gross margin profile tends to be in the 30 to 50% range and that the operating margin profile tends to be in the low double digit range. So of course your SG&A profile is also higher than the typical 3% range that we see in the distribution business and again if that business is outgrowing our distribution business, you will see some upward pressure in terms of the SG&A margin that we show on a consolidated basis. Did that answer your question? Aaron Burnham – Thomas Weisel Partners: That did, but I guess I was trying to zero in on the recent expansions you announced in the Philippines, which I would expect that to boost SG&A much more especially since that was announced I guess a few weeks ago.

One thing I’d comment is I think of SG& in talking in terms of percentages, again, these are the revenue amount associated with these businesses tends to be a few percent of our total overall business, but indeed you will see the SG&A dollars go up.

I’d like to comment. Since all the headcounts that we added are direct labor, so those expenses are going up to the cost of goods sold. So we should not see the SG&A grow substantially, because of the headcount’s growth. On the other hand, there was some investment, capital investment that you’ve already seen in the dollar depreciation cost and capital expenditures. They do go into the BPO business a lot more than the distribution business.

There are no further questions.

This concludes our second quarter earnings conference call. Thank you for joining us today. We will have a replay of this call available for two weeks beginning today at approximately 5:00 pm Pacific daylight time through July 10, 2008. As always, should you have any follow up questions, both Thomas and I are available to take your calls. Again, thank you for your participation today.