Ingram Micro Warns of Dramatic Slump in Sales
Ingram Micro Inc., the No. 1 distributor of computer products, said Wednesday that first-quarter profit will be as much as 50% below analysts’ forecasts because of slowing sales.
The company expects sales for the quarter to be $7.3 billion to $7.6 billion, with earnings of 15 cents to 18 cents a share. Analysts were projecting earnings of 32 cents a share for the quarter, according to a survey by First Call/Thomson Financial.
Although the company posted fourth-quarter earnings that beat analysts’ estimates by a penny, Ingram Micro began seeing a sharp decline in business during the third week in November, Chief Executive Kent Foster said.
“In my experience, it is the sharpest downturn that I’ve seen,” he added. “Now if it is significant, we’ll have to wait and see.”
During a conference call with analysts, Foster said the slowdown, while sharpest among dot-com resellers, is affecting all its vendors globally. Some of the company’s biggest vendors are Cisco Systems Inc., Compaq Computer Corp. and Hewlett-Packard Co.
As demand in the U.S. declines across all product lines, the Santa Ana-based company is looking for ways to make its processes more efficient to keep costs low, executives said on a conference call with analysts.
Earlier, Ingram raised prices and slashed inventories to better cope with slowing demand and falling prices for personal computers. Hewlett-Packard, Sun Microsystems Inc. and others have said companies are holding back spending on computers and related gear as economic growth slows in the U.S.
“We are cautious about the economic outlook and its impact on technology spending during 2001,” Foster said in a statement.
The company said its fourth-quarter net income fell 23% to $57.9 million, or 39 cents a share, from $75 million, or 51 cents a share, a year earlier. Sales rose 3% to $8.07 billion.
The fourth-quarter results a year ago include a gain of $125.2 million. Ingram Micro was expected to earn 38 cents in the recent period, the average estimate of analysts polled by First Call.
The company didn’t offer estimates for the rest of the year, saying it’s too soon to tell if the outlook will worsen. In the first quarter of 2000, the company’s operating profit totaled $24.7 million, or 17 cents a share, on sales of $7.8 billion.
The results were announced after the close of regular trading in U.S. markets. The stock closed at $13.80, off 40 cents a share, on the New York Stock Exchange.
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Bloomberg News and Dow Jones Newswires were used in compiling this report.
