Cost cutting helps Ingram Micro post profit

SANTA  ANA, California: Ingram Micro Inc.,

the world's largest distributor of computers and electronics, on Wednesday

posted a second-quarter profit as it cut jobs and costs to boost earnings in a

slow market. Santa Ana, California-based Ingram, which manages the flow of PCs

and electronics between manufacturers and retail stores, reported a profit of

$8.8 million or 6 cents per diluted share, compared with a loss of $12.0

million, or 8 cents per share.

Ingram has been cutting jobs and facilities for nearly two years and reported $5.4 million in pretax reorganization costs for the second quarter. Chief Executive Kent Foster said in an interview that the company would announce more cost cutting plans this quarter. Business overall was following traditional seasonal trends, with software and networking becoming a bigger share of Ingram business, at the expense of PC sales, he said.

Ingram has cut 1,000 jobs this year, trimming the work force to 13,500 at the end of the second quarter from more than 16,000 about two years ago. Excluding such costs and extraordinary items, earnings rose to $12.2 million or 8 cents per share in the second quarter, from $2.6 million, or 2 cents per share a year earlier. Sales fell to $5.35 billion from $6.02 billion a year earlier.

Analysts polled by Multex had seen earnings before items of 6 cents per share on sales of $5.3 billion. Ingram in April cut its outlook below Wall Street forecasts of earnings before items of 9 cents per share on sales of $5.89 billion. Shares of Ingram before the earnings news had ticked down 5 cents or 0.45 percent, to $11.00 on the New York Stock Exchange in a generally off market for technology stocks.

Cost cuts key

"The company's bottom-line performance this quarter was driven by our continued concentration on increasing gross margins and reducing our cost structure," Thomas Madden, the chief financial officer, said in a statement. Ingram said sales were hurt by slow demand for technology worldwide and forecast third quarter sales of $5.30 billion to $5.45 billion.

Net income before reorganization and special items would be $13.5 million to $17.0 million, or 9 cents to 11 cents per diluted share, it forecast, within the range of Wall Street expectations and in line with Ingram's April comments. It said that third quarter sales were typically flat compared with the second, followed by a single-digit increase in the fourth quarter. "The market is holding and the normal seasonality is there," Foster said, adding, "We do not yet see any upturn."



© Reuters