=DJ Ingram Micro Call -2: 500 Laid Off In 3Q
By Pat Maio Of DOW JONES NEWSWIRES
LOS ANGELES (Dow Jones)--Ingram Micro Inc. (IM) beat revenue guidance in its third quarter on Tuesday while its losses narrowed due to a major restructuring program unveiled a month ago that is designed to boost profits.
Kent B. Foster, chairman and chief executive of Ingram Micro, said the Santa Ana, Calif.-based company is on track to realize an additional $160 million in operating income by the first quarter of 2004.
"Since last year, we created a more efficient and productive organization," he said. "I'm pleased with the results, but they are not enough."
"We are projecting a normal season uptick," said Foster of the company's fourth-quarter guidance of $5.75 billion to $5.9 billion. Profit, excluding charges, are expected to range between $26 million and $29 million, or 17 cents to 19 cents per share.
Thomas Madden, chief financial officer of Ingram Micro, said on a conference call with analysts that the quarter's higher revenue was fueled by Microsoft Corp.'s (MSFT) software upgrade program, which expired on July 31, and improved sales in the Asia-Pacific and Latin American regions, and Europe.
Analysts on the call focused questions on a strategy by Hewlett-Packard Corp. (HPQ) to pass along higher costs to its distributors beginning Nov. 1.
"We are not in a position to absorb those costs and will have to push them down the channel," said Madden, noting that fourth-quarter guidance considers the higher prices.
Madden also said on the call that Ingram Micro had laid off 500 workers during the quarter, and announced plans to close a Harrisburg, Pa., distribution center and transfer services to Jonestown, Pa., and Mira Loma, Calif.
The underlying goal is to serve the West Coast out of Mira Loma and most of the East Coast out of Harrisburg, he explained.
The company also plans to consolidate office space in Buffalo, N.Y.
On Sept. 18, Ingram Micro, the world's largest wholesale distributor of technology products, announced a major restructuring designed to improve its profits through several cost-cutting initiatives.
The moves, which included an unspecified number of layoffs, consolidation of distribution facilities, and improved information technology initiatives to control cost efficiencies, were expected to help the company realize its operating income goal of an additional $160 million by 2004.
The restructuring will also include improved vendor and customer programs, better use of facilities and information systems, and consolidation of sales regions and administrative functions. Ingram Micro has taken a number of moves in recent years to improve its outlook.
Since the end of 1999, Ingram Micro has lowered its inventory by 58% to $1.5 billion as of Sept. 28, from $3.6 billion. The inventory level was up slightly from the second quarter when it stood at $1.44 billion.
Total debt, which was roughly $1.5 billion at year-end 2000, has been cut by 72% since then to about $417.8 million, which is $92 million less than three months ago.
Madden said the debt level is at its lowest level since it became a publicly traded company.
Since the end of 2000, when Ingram Micro had 16,500 workers, it has trimmed just over 21% of its work force to its current size of 13,000, which is down 500 workers, or 3.7% from levels at the end of June, Madden said
In its third quarter, Ingram posted a loss of $8.3 million, or 6 cents a share, on revenue of $5.6 billion. This compared with a loss of $13.3 million, or 9 cents, on revenue of $5.83 billion, in the year-earlier period.
Analysts surveyed by Thomson First Call estimated earnings of 11 cents a share, excluding charges, on revenue of $5.5 billion.
Excluding charges, net income was $20.1 million, or 13 cents a share - exceeding the company's guidance given in September.
Sales in the third quarter also exceeded the company's guidance of $5.3 billion to $5.45 billion. Excluding special items, Ingram Micro said last month that earnings per share would range between 9 cents and 11 cents.
Shares of Ingram Micro closed Tuesday at $13.36, down 59 cents, or 4.2%, on volume of 453,900, compared with daily average volume of 574,800. In the afterhours market, the stock rose 15 cents. - By Pat Maio, Dow Jones Newswires, 323-658-3776; patrick.maio@dowjones.com
(END) DOW JONES NEWS 10-29-02 |
