Ingram Profits Top Analysts’ Forecast, But . . .

Ingram Micro Inc., the world’s largest computer-products distributor, posted fourth-quarter profits that more than doubled Wall Street’s expectations--but its operating results were another story.

The Santa Ana company reported earnings of $75 million, or 51 cents a share, buoyed mostly by its sale of $125 million of stock in Japanese investment giant Softbank Inc.

On an operating basis, however, Ingram lost $36.5 million, weighed down by $102 million in one-time costs swallowed as the company moves from a system of traditional product markups to charging fees for its services.

The mixed results reflect a company in transition, Chief Executive Jerre Stead said. After more than a year of sliding profits, executive defections and vicious industry-wide price-cutting, Ingram used last year’s final months to clear debts and redefine its relationships with customers.

“This gives us a good clean [balance] sheet to go forward,” he said. “I feel we have positioned ourselves with everything we’ve done for very profitable growth.”

Ingram spent much of last year in flux. The company overhauled top management after more than a dozen high-level executives left, and it’s still searching for Stead’s replacement. He announced in September that he is stepping down, giving up day-to-day control once a successor is found. He remains the company’s chairman.

Ingram’s results suffered as a price war broke out between distributors, leaving its profit margins in tatters.

“We were shaking our heads at pricing that made no sense,” Stead said.

The company faced new competition from manufacturers as well, as Dell Computer Corp. and Gateway Inc. sold computer hardware and software directly to consumers.

Ingram’s fourth-quarter results, including sales of $7.8 billion, ended up slightly better than the previous year’s final three months. The company then earned $73.2 million, or 49 cents a share, on revenue of $6.2 billion.

For the year, Ingram earned $183.4 million, or $1.24 a share, down 25% from the previous year’s profit of $245.2 million, or $1.64 a share. Sales grew 27% last year to $28.1 billion.

“The sales were better than expected, clearly, but the margins are not what they should be,” said Robert Anastasi, an analyst at Raymond James.

In the last year, investors have lashed out as the company faltered, sending Ingram’s shares reeling from more than $52 a share in October 1998 to as low as $10 a year later.

The stock rallied early this week as investors took note of the company’s appreciating stake in Softbank, shares of which have skyrocketed to about $1,700.

Even after selling the shares in the last quarter and an additional $69 million worth of stock in January, Ingram still owns about $450 million in Softbank stock.

Investors also responded positively to Ingram’s investment in Viacore Inc., a new Internet marketplace that aims to speed up business-to-business E-commerce.

Ingram’s stock closed at $15.50 Thursday, up 50 cents.

Ingram expects net income of $88 million to $94 million, or 60 cents to 64 cents a share, for the first three months this year, company executives said.

The company’s long-term profitability relies on its ability to change how it makes money.

Two years from now, two-thirds of Ingram’s customers in manufacturing and retailing will pay fees for services, eliminating the usual markup that the distributor relies on, Stead said.