92% Drop in Profits for Ingram Micro

Ingram Micro Inc., the world’s biggest computer-products distributor, on Tuesday reported a 92% drop in second-quarter operating profit as demand slowed, and said third-quarter sales and earnings may not meet analysts’ forecasts.

Profit from operations was $2.6 million, or 2 cents a share, compared with net income of $33.2 million, or 22 cents, a year earlier, the company said. Sales fell 18% to $6 billion from $7.29 billion.

Sales declined as the economic slowdown spread to Canada and parts of Western Europe, the company said. In June, the Santa Ana company reduced its second-quarter forecast and said it planned to eliminate about 1,000 U.S. jobs to reduce expenses and cope with declining demand.

In a conference call with analysts, company officials described the financial environment for their industry as the worst ever. They also noted that Ingram had managed to cut $22 million in operating expenses in the second quarter.

Ingram Micro said third-quarter results will range from break-even to a profit of 4 cents a share, before charges, on revenue of $5.7 billion to $6 billion. Analysts forecast a profit of 4 cents a share on $6 billion in revenue, according to a survey by First Call/Thomson Financial.

In last year’s third quarter, the company reported net income of $38.9 million, or 26 cents a share, on revenue of $7.6 billion.

For the second quarter, the operating profit excludes $12 million in charges for facility closings and firings and $2.6 million for a repurchase of its zero coupon convertible debentures. Including charges, the second-quarter loss was $12 million, or 8 cents a share, the company said.

Ingram was expected to have a loss of 3 cents a share, analysts said in the First Call survey.

Ingram Micro said European sales were $1.57 billion, a decline of 8% in U.S. dollars, and relatively unchanged in local currencies. Sales in other regions fell 7% to $1.05 billion. Latin America exceeded expectations, the company said.

The results were released after regular U.S. trading hours. The stock was unchanged at $13.96 a share on the New York Stock Exchange.