Disappointing earnings results from Ingram Micro Inc. torpedoed distributor shares late last week and promoted concerns that technology spending isn't as robust as expected.
Ingram Micro on April 29 announced 1Q net income of $37.6 million, up sharply from $10.1 million in 1Q 2003. Nevertheless, the results fell short of investor expectations and Ingram Micro shares fell a whopping 31.87 percent during the week ended April 30. The results shook the entire channel, triggering a widespread sell-off among integrator, distributor and solutions provider shares.
Indeed, our Ziff Davis Channel Zone Stock Index fell 6.87 percent for the week ended April 30. It was the index's worst one-week showing of the year. Major decliners included Ciber Inc. (CBR, -20.24 percent), Tech Data Corp. (TECD, -16.93 percent), PC Connection Inc. (PCCC, -14.30 percent), Avnet Inc. (AVT, -13.58 percent), Arrow Electronics Inc. (ARW, -11.17 percent) and Sapient Corp. (SAPE, -11.17 percent). Of our 30 index members, 26 suffered declines on the week.
Some companies attempted damage control. Ciber on April 28 issued a statement clarifying its 2004 revenue outlook, predicting that the company would generate $820 million to $835 million in sales. But the statement didn't revive Ciber shares, which tumbled on April 27 after the company delivered a $6 million 1Q profit, a 30 percent improvement over 1Q 2003. Still, investors were expecting slightly better results and Ciber shares fell more than 20 percent during the week.
The index's only major winner last week was Covansys Corp. (CVNS, +15.06 percent). Shares in the integrator and outsourcing specialist rallied after Covansys announced favorable financial relationships with Clayton, Dubilier & Rice Inc. (a private equity firm) and Fidelity National Financial Inc.
Next up are earnings from Perot Systems Inc. (PER) on May 4 and
Computer Sciences Corp. (CSC) on May 17.
Next page: The full Stock Index for the week of April 26
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About this Column: The Ziff Davis Channel Zone Stock Index tracks 30 channel-related stocks on a weekly basis. We don't recommend buys, sells or holds. Rather, the index seeks to measure the channel's financial health. We launched the index on Oct. 24, 2003 with a value of 1000. Each stock in the index is equally weighted. For example, if one stock rises 5 percent and another falls 4 percent, the net result is a 1 percent gain.
Joseph C. Panettieri has covered Silicon Valley since 1992. He was recently editorial director at the New York Institute of Technology . ) but returns full-time to Ziff Davis Media Inc. on May 10.
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