Arrow Electronics (NYSE:ARW) reported that sales dropped 22 percent year over year in the second quarter to $3.39 billion, while net income also dropped sharply.

But the electronics and IT distribution giant tempered those results with some hope for the future, saying the end of the quarter showed more strength as both bookings and billings improved in North America.

Arrow reported net income of $21.1 million or 18 cents per share, compared with net income of $96.2 million or 79 cents per share for the same period a year ago, a staggering drop after several quarters that have delivered nothing but bad news to technology vendors and distributors.

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But Arrow is talking cautiously about some relief potentially being on the way, perhaps toward the end of 2009, as some cancellation rates are at the lowest they've been in the last 12 months and certain backlogs are growing again. Another giant IT distributor, Ingram Micro (NYSE:IM), is set to announce earnings later the week of July 27, and electronics and IT distributor Avnet (NYSE:AVT) will announce its results the following week.

Arrow reported that its IT sales—or sales from its global ECS (enterprise computing solutions) group—decreased by 19 percent year over year to $1.12 billion.

"ECS sales were at the low end of our expectations due to lower demand and IT spending, as capital-intensive projects continue to be highly scrutinized," CEO Michael Long says in Arrow's earnings statement. "With strong operating margins and cash flow, we remain confident that our strategy of portfolio diversification will continue to provide benefits as the need for complex technology systems to provide security and storage solutions has not diminished despite the macro headwinds."

That said, the company continued to experience declines in its European operations.

"Business conditions remain challenging and we have seen accelerating sales declines in Europe, and we are taking appropriate actions to maintain profitability," Chief Financial Officer Paul Reilly told analysts during a post-earnings release conference call.

Arrow says that will mean an additional $100 million in annual cost reductions that are expected to be implemented in the second half of 2009, primarily in Arrow's European operations.

Looking ahead, Arrow expects third-quarter sales to be between $3.1 billion and $3.7 billion, with global enterprise computing solutions sales of between $1.0 billion and $1.2 billion. Earnings per share are expected to be in the range of 25 cents to 37 cents.