Ingram Meets Q3 Expectations

By Joseph C. Panettieri  |  Posted 2001-10-31 Print this article Print

Despite falling sales, Ingram Micro Inc. met Q3 earnings expectations because of stringent internal cost controls.

Despite falling sales, Ingram Micro Inc. met Q3 earnings expectations because of stringent internal cost controls. Moreover, the distributor says the Sept. 11 terrorist attacks did not have a significant impact on Q3 results.

Revenue for the quarter was $5.83 billion, down from $7.56 billion for the corresponding quarter last year. Net income (before specialty items) was $5.4 million, compared to $38.9 million in the corresponding quarter last year. Including the special items, Ingram Micro posted a Q3 net loss of $13.3 million.

Although the economic slowdown continues to hamper Ingram Micros top line, CEO Kent Foster applauded his companys internal cost controls. Foster noted that Ingram Micros gross margins increased to 5.27 percent in Q3, which is 14 basis points higher than Q3 last year. Moreover, Ingram Micros inventory is at a five-year low.

In an interview with Smart Partner on Tuesday evening, Foster expressed continued concern about the economy but also pointed to several potential bright spots for Ingram Micro. In terms of geographic opportunities, Foster said China represents real opportunity for growth. He also pointed to Brazil and Latin America as other potential growth markets.

Foster also was optimistic about Ingram Micros fee-based services push. The companys supply chain management services, for instance, allow customers to squeeze costs out of their respective supply chains.

Ingram Micro also has an ASP (application service provider) beta test underway with several customers. Foster said the "software as a service" market remains a genuine opportunity for Ingram Micro. However, Ingram Micro U.S. president Kevin Murai conceded that the ASP projects have yet to generate substantial revenue for the company.

On the cost-control front, Ingram has eliminated about 3,000 positions this year. The company has about 13,500 employees and continues to monitor all internal costs very closely. CEO Foster declined to predict if Ingram Micro will make additional staff cuts in Q4.

Looking ahead, Ingram Micro expects Q4 revenue of $5.7 billion to $6.2 billion and net income of $6 million to $15 million, before any special charges.


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