Ingram Micro Surprised by Q1 Softness

Ingram Micro, reporting earnings April 24, attributed its revenue softness
to broad macroeconomic factors in some geographic areas, including North
America and Europe.

Ingram Micro CEO Greg Spierkel told Channel
Insider that the rising consumer prices and the real estate crisis in the United
States are weighing on the market.

"There’s the rise in the price of fuel, up 60 to 70 percent in the past
year, and the price of goods around foods and consumer-oriented purchases are
hurting the business environment," he said. At Ingram Micro, business
typically picks up in the last five weeks of each quarter, but this time around
it did not, Spierkel said.

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here for full Ingram Micro earnings results.

"We were caught by surprise by the softness at the end of the
quarter," he said. That said, Spierkel said Ingram Micro is still holding
to a "fairly healthy" outlook for the current quarter, which ends in
June. "I think the analysts on the [earnings] call were surprised that we
could hold onto our seasonality from quarter one to quarter two. We are
forecasting 4 percent to 7 percent growth," he said.

In response of the softening economy, Ingram Micro has initiated a cost-cutting
program and has already cut 66 jobs in North America
over the past two weeks. In Europe the cuts are still
under evaluation and will happen over the next two quarters.

"Beyond that, we don’t expect any more significant changes, unless things
weaken further," he said.

As for inventory, Spierkel said Ingram Micro went higher than it had in a few
years due to the softness at the end of the quarter that just ended. The
company has two to three more days of inventory than it would like to have,
according to Spierkel.

"There’s been a commitment by the management team, and we feel good that
we will get inventory back in the normal range within the current
quarter," he said.

Unlike Avnet, which also reported earnings April 24, server sales were not
lagging more than other products.

"There wasn’t a large single product category that fell off the edge of a
cliff," he said. But some product categories did show particularly strong
growth.

They included point of sale, data capture, wireless printers used in certain
solution sets and the company’s managed services business.  Mobility
products including laptops, PDAs and wireless products also showed strength in
the quarter.