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Ingram Micro warns
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June 13, 2001: 4:50 p.m. ET
Computer distributor blames IT slowdown in Europe for lower sales
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NEW YORK (CNNfn) - Just a week after announcing it will cut 1,000 jobs, or 6 percent of its total workforce, Ingram Micro, the world's largest distributor of computer products said its second-quarter financial results will fall short of previous expectations.
And executives at the Santa Ana, Calif.-based company said they plan to take additional cost-cutting measures throughout the remainder of this year in the face of slower technology spending.
After the close of trading Wednesday, the company said it expects second-quarter revenue to range between $5.8 billion and $6 billion, while its net income, excluding taxes and one-time charges, will range from break-even to a loss of $10 million.
The company also said its has completed the cash repurchase of approximately $225 million of its convertible bonds, which will result in a loss, net of tax, of roughly $3 million in the second quarter.
Ingram Micro did not provide its anticipated results on a per-share basis. Analysts polled by earnings tracker First Call most recently had expected the company to post a profit of 9 cents per share on sales of roughly $6.2 billion.
"Until recently, the dramatic softening of demand for information technology products had been limited primarily to the United States," Kent B. Foster, Ingram Micro's chairman and chief executive, said in a statement.
"As many leading technology companies reported in the last few weeks, the decline in IT spending has spread to Europe and other parts of the globe, Foster added. "We are adjusting our guidance to reflect a further reduction of U.S. revenues and the international sales slowdown."
Last week, Ingram Micro unveiled a range of cost-cutting measures -- including 1,000 layoffs and the closure of two distribution facilities – which executives said will save the company about $30 million to $40 million annually. The company said it expects to record a charge of as much as $15 million against its second-quarter earnings in connection with those measures.
The company on Wednesday said it expects to take further cost-cutting measures throughout the year, which will result in additional savings as well as one-time charges.
"We remain as diligent about cost-reduction today as we were with increasing gross margins in 2000, although we will not take actions that sacrifice customer service or inhibit profitable growth," said Michael J. Grainger, Ingram Micro's president and chief operating officer.
"Last year, we made quarter-by-quarter advancements in the gross margin, and we will make similar, step-by-step improvements in our cost structure this year," Grainger added.
Shares of Ingram Micro (IM: Research, Estimates) fell 11 cents to $14.06 in New York Stock Exchange trade Wednesday. 
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