UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):   November 2, 2010

 
Registrant’s telephone number, including area code:   (603) 683-2000

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition

On November 2, 2010, PC Connection, Inc. announced its financial results for the quarter ended September 30, 2010.  The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.  

The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01.  Financial Statements and Exhibits

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX

Exhibit 99.1

PC Connection, Inc. Reports Third Quarter Results

Company Announces Record Sales; Earnings Nearly Triple

MERRIMACK, N.H.--(BUSINESS WIRE)--November 2, 2010--PC Connection, Inc. (NASDAQ: PCCC)

THIRD QUARTER SUMMARY:

• Q3 net sales: $532.8 million, up 32% year over year

• SG&A: 8.9% of net sales, improved from 10.2% last year

• Operating income: $14.3 million, or 2.7% of net sales

• Diluted earnings per share: $0.32 per share

PC Connection, Inc. (NASDAQ: PCCC), a leading direct marketer of information technology (IT) products and services, today announced results for the quarter ended September 30, 2010. Net sales for the third quarter were $532.8 million, an increase of $129.7 million or 32.2%, compared to $403.1 million for the three months ended September 30, 2009. The strong net sales for the quarter resulted primarily from double digit year-over-year growth achieved by each of our three major business segments. Net income for the three months ended September 30, 2010 was $8.6 million, or $0.32 per share, compared to net income of $2.9 million, or $0.11 per share, for the corresponding prior year period. Earnings this quarter were almost 200% higher than the third quarter of 2009.

Net sales for the nine months ended September 30, 2010 were $1,418.6 million, an increase of $312.1 million or 28.2%, compared to $1,106.5 million for the nine months ended September 30, 2009. Net income for the nine months ended September 30, 2010 was $16.1 million, or $0.59 per share, compared to net loss of $5.2 million, or $0.19 per share, for the nine months ended September 30, 2009. The nine-month period ended September 30, 2009 included special charges that reduced earnings and earnings per share. Pro forma net income, excluding these special charges, for the nine months ended September 30, 2009 was $3.0 million, or $0.11 per share. The Company did not record any special charges for the nine months ended September 30, 2010. A reconciliation between net loss on a GAAP basis and pro forma net income for the nine months ended September 30, 2009 is provided in a table below immediately following the Consolidated Statements of Operations.

As previously announced, the Company formed a new sales company, PC Connection Express, Inc., to focus on the specialized requirements of the consumer and small office/home office (“SOHO”) markets. Prior to its formation, consumer and SOHO sales were reported within the Company’s small- and medium-sized business (SMB) segment. In order to facilitate comparison with current period results, 2009 revenues for the SMB segment have been restated on a pro forma basis to exclude consumer and SOHO sales.

Quarterly Sales by Segment:

• Net sales for the SMB business segment increased by 27.3% to $208.7 million compared to the third quarter pro forma sales of 2009. Sales to small- and medium-sized businesses experienced significant growth across most product lines and market sectors as the B2B demand environment remained strong over the last three quarters.
• Net sales for MoreDirect, Inc., the Company’s Large Account segment, increased year over year by 53.6% to $159.6 million, topping the previous record for its largest quarterly sales performance. Large account/enterprise customers have increased their IT spending due to the release of pent-up IT demand and PC refresh. New customer acquisitions also contributed to the year-over-year increase.
• Net sales to government and education customers (Public Sector segment) increased year over year by 24.9% to $145.6 million. This segment also posted its largest quarterly sales performance, topping the previous net sales record. Contract sales made to the federal government and higher education customers have driven strong net sales growth for six straight quarters.
• Net sales to consumers and SOHO customers by PC Connection Express were $18.8 million in the third quarter of 2010, up slightly from the $18.6 million of comparable sales in the third quarter of 2009.

Quarterly Sales by Product Mix:

• Notebook and PDA sales, the Company’s largest product category, increased by 50% year over year and accounted for 17% of net sales in the third quarter of 2010 compared to 15% of net sales for the third quarter of 2009. A 44% increase in unit sales for the quarter as well as a slight increase in average selling prices, or ASPs, drove the robust year-over-year growth.
• Software sales increased by 49% year over year, accounting for 15% of net sales in the third quarter of 2010 compared to 14% of net sales for the third quarter of 2009. A large public sector order contributed to this product line’s year-over-year revenue growth.
• Desktop/server sales increased by 45% year over year, accounting for 15% of net sales in the third quarter of 2010 compared to 14% of net sales for the third quarter of 2009. Desktop sales grew as a result of a 79% year-over-year increase in unit sales in the third quarter. The gains associated with the increased demand were partially offset by a decrease in average selling prices. Server sales grew as a result of a 32% increase in unit sales year over year and a slight increase in ASPs.
• Memory and system enhancement sales grew 83% year over year and accounted for 5% of net sales in the third quarter of 2010 compared to 3% of net sales for the third quarter 2009. The large increase was driven substantially by the year-over-year increase in desktop and notebook sales experienced in the third quarter of 2010.

Overall gross profit dollars increased by $15.6 million, or 33.7%, to $62.0 million in the third quarter of 2010 compared to the prior year quarter primarily due to higher revenues. Consolidated gross margin, as a percentage of net sales, was 11.6% in the third quarter of 2010 compared to 11.5% in the prior year quarter. Both the SMB and the Public Sector segments improved gross margins in the third quarter compared to the prior year period. Higher agency revenues and product margins in the SMB and Public Sector segments offset lower product margins in the Large Account segment in the quarter.

Overall annualized sales productivity increased by 35% in the third quarter of 2010 compared to the third quarter of 2009. Sales productivity in the Large Account, Public Sector, and SMB segments increased by 60%, 30%, and 27%, respectively, in the third quarter of 2010 compared to the prior year period primarily due to the year-over-year revenue increases. On a consolidated basis, the total number of sales representatives was 595 at September 30, 2010, compared to 601 at September 30, 2009, and 588 at June 30, 2010.

Total selling, general and administrative expenses for the quarter increased year over year by $6.4 million, or 15.5%, but decreased as a percentage of net sales to 8.9% for the third quarter of 2010, from 10.2% for the third quarter of 2009. The year-over-year dollar increase was primarily attributable to increased variable compensation associated with increased operating results. The year-over-year decrease in SG&A as a percentage of net sales was due to the higher level of sales in the third quarter of 2010 and improved expense management.

“We are pleased with our record-setting revenue and strong earnings performance this quarter,” said Patricia Gallup, Chairman and Chief Executive Officer. “We achieved the largest revenue quarter in the Company’s history, and at the same time experienced a 182% increase in operating income, nearly tripling our earnings per share. We believe our strong management team and core business strategies position us well for future success.”

About PC Connection, Inc.

PC Connection, Inc., a Fortune 1000 company, operates through four sales companies: PC Connection Sales Corporation, MoreDirect, Inc., GovConnection, Inc., and PC Connection Express, Inc., headquartered in Merrimack, NH, Boca Raton, FL, Rockville, MD, and Portsmouth, NH, respectively. All four companies can deliver custom-configured computer systems overnight from PC Connection Services’ ISO 9001:2000 certified technical configuration lab at its distribution center in Wilmington, OH. Investors and media can find more information about PC Connection, Inc. at http://ir.pcconnection.com.

PC Connection Sales Corporation (800-800-5555), the original business of PC Connection, Inc. serving the small- and medium-sized business sector, is a rapid-response provider of IT products and services. It offers more than 180,000 brand-name products through its staff of technically trained sales account managers and catalog telesales representatives, catalogs, and publications, and its website at www.pcconnection.com.

MoreDirect, Inc. (561-237-3300), www.moredirect.com, provides corporate technology buyers with a comprehensive web-based e-procurement solution and in-depth IT supply-chain expertise, serving as a one-stop source by aggregating more than 300,000 products from the inventories of leading IT wholesale distributors and manufacturers. MoreDirect’s TRAXX™ system is a seamless end-to-end interface that empowers clients to electronically source, evaluate, compare prices, and track related technology product purchases in real-time.

GovConnection, Inc. (800-800-0019) is a rapid-response provider of IT products and services to federal, state, and local government agencies and educational institutions through specialized account managers, catalogs, and publications, and online at www.govconnection.com.

PC Connection Express, Inc. (888-800-0323) is a rapid-response provider of computer products and consumer electronics to home, home office, and small office users. Customers can purchase the best-known brands in the industry online at www.pcconnectionexpress.com or order by calling a trained sales specialist. The subsidiary includes the MacConnection brand (800-800-2222), one of Apple’s largest authorized online resellers at www.macconnection.com.

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“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to, the impact of changes in market demand and the overall level of economic activity and environment, or in the level of business investment in information technology products, competitive products and pricing, product availability and market acceptance, new products, fluctuations in operating results, and the ability of the Company to manage personnel levels in response to fluctuations in revenue, and other risks that could cause actual results to differ materially from those detailed under the caption “Risk Factors” in the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission for the quarter ended June 30, 2010. More specifically, the statements in this release concerning the Company’s outlook for 2010 and other statements of a non-historical basis (including statements regarding the Company’s ability to grow its business and increase market share) are forward-looking statements that involve certain risks and uncertainties. Such risks and uncertainties include the ability to realize market demand for and competitive pricing pressures on the products and services marketed by the Company, the continued acceptance of the Company's distribution channel by vendors and customers, continuation of key vendor and customer relationships and support programs, and the ability of the Company to hire and retain qualified sales representatives and other essential personnel. The Company assumes no obligation to update the information in this press release or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise.

CONTACT:
PC Connection, Inc.
Stephen Baldridge, 603-683-2322
Sr. Vice President of Finance & Corporate Controller