Ingram’s Quarterly Earnings Drop 26%

Santa Ana-based Ingram Micro Inc., the world’s largest computer distributor, said Tuesday that despite record sales, its first-quarter earnings fell 26%, in line with forecasts that were reduced after Ingram warned that price-cutting would hurt profits.

Ingram’s earnings fell to $42.3 million, or 29 cents a share, from $56.5 million, or 38 cents a share, in the year-earlier period. The company was expected to earn 28 cents, according to a poll of financial analysts by First Call Corp. The company’s sales during the quarter rose 31% to $6.73 billion from $5.15 billion.

Last month, Ingram said it would cut 1,400 jobs, or 10% of its work force, and report lower earnings as a result of price cuts meant to spur sales. An industrywide rise in personal-computer shipments helped compensate in part for the lower prices, and more stable PC prices in the last month gave analysts hope that the price wars may be easing.

“PC sales were pretty robust this quarter,” helping Ingram, said Bill Cage, an analyst at J.C. Bradford & Co., who rates Ingram Micro a “buy.” “Also, there are signs of improving pricing conditions.”

Before last month’s warning from the company, analysts had expected Ingram Micro to earn 42 cents a share.

Worldwide PC shipments rose 19% in the first quarter, driven by strong demand from consumers, researcher International Data Corp. said Tuesday.

Ingram had a charge of $6.2 million related to the company’s reorganization, as well as a pretax gain of $6.2 million.

The company also said its build-to-order production of computer systems with Solectron Corp. began in the last few days.

Under the strategic alliance the two companies formed in October, Solectron’s facility in Newark, N.J., and Ingram Micro’s Memphis operations will work together to build custom computer systems.

The company’s stock on Tuesday fell 6 cents to $28.19 a share. The company released its earnings report after the market had closed.