Ingram Micro sees drop in sales -->
By Sergio G. Non
Staff Writer, CNET News.com
June 13, 2001, 4:45 p.m. PT
Ingram Micro on Wednesday became the latest tech-related company to warn that the
economic slowdown has hit home again--and is spreading.
After market close, the largest distributor of technology products said it now expects to report
revenue of $5.8 billion to $6 billion for the second quarter ending June 30. That's less than the
$6.2 billion predicted by earnings tracking firm First Call.
The new target represents a year-over-year decline of 18 percent to 20 percent. Ingram Micro
previously expected second-quarter sales would fall 8 percent to 14 percent from the year-ago
period.
Ingram Micro could lose up to
$10 million in the second
quarter, and it expects
break-even results at best,
executives said. First Call
consensus was predicting a
second-quarter profit of 9
cents per share.
"As many in our industry
reported, the demand slump
is no longer isolated to the
U.S.," said Ingram CEO Kent
Foster. "We're now
experiencing slow markets
throughout the world."
Sales in every part of the
world were weaker than
expected in May and early
June, said Ingram President Michael Grainger.
European weakness started in the United Kingdom, spread to Scandinavia and is now hitting
Germany, Grainger said during a conference call with analysts. Sales in the United States
were also weaker than expected, although U.S. sales may have stopped declining, executives
said.
"We've been seeing about the same level of sales for roughly the past six weeks in the U.S.,"
Foster told analysts. "We're not predicting anything, but up until that point, we had not had a
period where we thought that we could even predict what might happen the next day. Things
could change tomorrow, but that's a decent period of time to have roughly the same level of
sales."
Shares of Ingram Micro fell 11 cents to $14.06 in Wednesday's regular trading ahead of the
news.
Wednesday's warning comes a week after Ingram Micro announced cost-cutting moves
including 1,000 layoffs. And in late May, Ingram's closest rival, Tech Data, told analysts to trim
their earnings forecasts.
Some companies that make the products that Ingram Micro sells, including Hewlett-Packard
and Compaq Computer, have also recently warned of continued softness.
Ingram Micro's cost-cutting moves, Grainger said, will keep its gross margins about the same
as in the first quarter, when the company boosted gross margins to 5.34 percent even though
revenue fell 8 percent year over year. |
