nice article on arw earnings...
Monday October 25, 8:24 pm Eastern Time
Arrow earnings rise, sees the light
MELVILLE, N.Y., Oct 25 (Reuters) - Arrow Electronics Inc. (NYSE:ARW - news), the world's No. 1 distributor of components on Monday reported a 3.3 percent rise in net income, signaling the possible start of a recovery in the boom-and-bust semiconductor industry.
Melville, N.Y.-based Arrow, said it earned $36.8 million, or $0.38 per diluted share, on sales of $2.4 billion, compared with net income of $35.6 million, or $0.37 per share, on sales of $2.1 billion in the third quarter of 1998.
It was the second consecutive increase in quarterly earnings and the first quarterly increase compared with a year ago the company posted in nine quarters, the company said.
Shares of Arrow Monday rose 1-3/8 to 19-15. The company's 52-week high was 26-7/8, its low 13-3/16.
Representing about 46 percent of Arrow's business, semiconductor distribution is the company's core business, Robert Klatell, Arrow executive vice president told Reuters.
''It does seem we're entering into early stages of recovery,'' Klatell said.
Klatell also said the recovery seems to be independent of the September earthquake in Taiwan, a semiconductor manufacturing center.
The semiconductor industry has been in a supply-driven recession for about three years, with manufacturers adding to capacity, while unit demand remained steady and prices fell.
Klatell said his company has seen incremental signs of recovery that started with a bottoming out in the second quarter. Supply seems to be falling and coming into balance with demand, he said. Prices are firming and in October, lead time, the time it takes suppliers to fill orders of distributors are growing longer.
Arrow has seen gross profit margins up slightly about 20 basis points from a year ago to 13.6 percent.
The greater the selling price the more gross profit dollars the company takes in, he explained.
''As average selling prices increase,'' Klatell said, ''we get more gross profit dollars. As this process continues than we get some benefits on expenses as percentage of sales , if that continue over times, you were also see a expansion of operating margins, if this continues, that we would expect a number of quarters of increasing results.''
The increase in the semiconductor sales was offset by 5 percent decrease in computer component sales.
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