Ingram Micro sees no bump or dip in PC demand

Peter Henderson

SAN FRANCISCO: US demand for personal computers in the last few months has

shown neither seasonal jumps nor unexpected dips, an executive at the largest PC

wholesaler, Ingram Micro Inc., said on Thursday.

"Demand is relatively stable. It is not negative, not positive, not

optimistic. It is neutral at this point," Kevin Prewitt, a director of

product management systems and vendor relations, said in a telephone interview.

The Santa Ana, Calif.-based company saw an uptick in demand following Sept.

11 from resellers immediately predicting companies would need to replace lost

PCs. But the more recent accounting scandal at WorldCom which roiled financial

markets had not yet affected PC demand, Prewitt said.

Ingram resells PCs from Hewlett-Packard Co., International Business Machines

Corp., Sony Corp., Toshiba Corp. and Apple Computer Inc. to local computer

services firms and retailers, and it handles some logistics for Dell Computer

Corp. PC systems make up 25-30 per cent of Ingram's sales, which were $5.6

billion last quarter.

Analysts concerned by weak corporate and consumer technology spending have

cut sales outlooks for major computer makers recently, including HP and IBM.

"The latest data supports a slow rate of recovery, while the industry

still has significant excess capacity," brokerage UBS Warburg wrote in a

recent report analyzing US Commerce Department for May, which showed inventory

down from a year earlier but relatively high compared with shipments.

Hewlett-Packard in particular has raised concerns about a build-up of

consumer desktop PCs in the channel of resellers and retailers, estimating on

May 14 that there were 8 or 9 weeks of consumer PC inventory. That was double

the level of PCs in the commercial PC sales channel, which were at a more normal

three to four weeks, HP said.

Inventories at Ingram, which indirectly sells more to businesses than

consumers, are also flat, Prewitt said. "We haven't seen any inventory

sitting around across the board anywhere, not just specific to HP or Compaq.

Inventory levels are fine in our opinion."

Prewitt said that there had not been a sales bump in May and June, when

consumers often buy PCs for graduating students and for Fathers Day, and he

declined to forecast whether there would be a back-to-school boost. Ingram and

PC industry executives had seen evidence that seasonal changes in sales were

returning, such as the strong holiday season at the end of last year.

But Prewitt said the weak economy was still the main factor in buying

decisions for corporations. "I don't think you can even use seasonality in

the market we are in today. Seasonality to me is kind of out the window. And I

don't think I could predict when it would pick back up," he said.

Ingram on April 25 had forecast that sales in its second quarter would be

$5.25 billion to $5.40 billion, down from $5.62 billion in the first quarter.

Six Wall Street analysts polled by Multex on average expected revenue of $5.3

billion.

(C) Reuters Limited.