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Non-Tech : Ingram Micro

IM 38.89

0.0%

Dec 13 4:00 PM EST

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To: Reseller who wrote (516)	2/18/2000 6:49:00 AM
From: Dale Stempson	Read Replies (1) of 576

Reseller, I've read the earnings report and listened to the CC. While there were certainly indications of potential positives going forward, I'm disappointed overall. Focusing primarily on the negatives: The sales of half their Softbank position last quarter and this quarter means my earlier estimate of gains was grossly overstated due to the recent appreciation in share value. The reorganization expenses, as well as larger-than-usual provisions for excess inventory, vendor-sponsored programs and doubtful accounts (totaling over $150 million) bother me. Excluding the Softbank gain and depending on how one chooses to calculate what portion of the total should be viewed as "one time charges", IM has left us on our own to determine where they would have ended up compared to estimates. In my analysis, IM missed their number. Weak gross margins continue to be a concern and the IM EPS guidance for this quarter (less the known Softbank gain) is below current consensus. Softbank saved us last quarter and will likely continue to save us throughout the remainder of the year (as long as the share price holds). The money buys us time to implement a new model that can grow future earnings. While I believe IM will succeed going forward and still consider the stock a good investment, the level of growth and appreciation I was expecting yesterday has been significantly reduced today. It will be interesting to see how the market reacts when trading begins this morning. The reported EPS and guidance EPS, as well as revenue growth and the Softbank investment, will likely attract the attention of many investors. In addition it appears that after-hours trading saw IM moving higher. I'm seldom successful with predicting how a stock will trade following an earnings report, but in this case I wouldn't be surprised to see IM quickly reverse the after-hours pop and end up moving lower today. I hope I'm wrong. Regards - Dale

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