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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: Junkyardawg who wrote (15800)	3/8/1999 1:07:00 PM
From: Junkyardawg	Respond to of 90042

From the HS thread HS - NYSE By Kate Berry ORLANDO, Fla. (Dow Jones)--Claudio Osorio, chairman and chief executive of CHS Electronics Inc. (HS), said Monday he is comfortable with Wall Street's consensus estimate for the fourth quarter, despite an ongoing audit that has sent its stock into a tailspin. "Things are progressing smoothly, swiftly," Osorio said of the fourth-quarter audit, announced Wednesday, that is looking into discrepancies in vendor rebates from manufacturers. "We feel confident with the earnings estimates that are available to the street before our earnings announcement." A survey of analysts had been looking for the Miami computer distributor to post earnings of 66 cents a share in the fourth quarter. On Feb. 24, the company issued a preliminary earnings report indicating it expects to earn at least 47 cents a share in the fourth quarter, but Osorio said he is now comfortable with Wall Street's 66 cents a share estimate, based on a preliminary count of credit notes from vendors. Pending the outcome of the audit, that means that nearly 20 cents a share, or roughly $12 million net income, is at stake. The company expects the audit to be completed no later than March 15. Shares of CHS fell 37% last week and were trading recently at 7 7/16, down from a 52-week high of 24 1/2 in May. Osorio commented briefly about the audit at an institutional investor conference sponsored here by Raymond James & Associates. Vendor rebates are common practice in the computer-distribution industry and CHS currently is halfway through an audit of the written documentation for rebates that it receives from vendors. Investors are worried about not only the uncertainty of CHS's earnings, but also the slower growth and stiffer price competition that have hit suppliers like Tech Data Corp. (TECD) and Ingram Micro Inc. (IM), two companies whose failure to meet fourth-quarter earnings targets brought down valuations. In addition, analysts say, there is concern about how the Internet will affect the distribution business if manufacturers try to sell directly to consumers. Looking ahead, Osorio said CHS got off to a strong start in 1999, with continued growth in Europe, excluding Britain. The company plans to have a personal computer assembly line in Europe by July with an expected capacity of 1.2 million units. He expects CHS to make selective acquisitions going forward, particularly in Australia, Philippines and Thailand. -Kate Berry; 305-379-3744 (END) DOW JONES NEWS 03-02-99 12:37 PM