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Ingram Micro's Earnings Rise 45%; Costs Up 1.1%

April 26, 2006|From Bloomberg News

Ingram Micro Inc., the world's largest distributor of computers, software and electronics, said Tuesday that first-quarter profit rose 45% as the company kept a lid on costs.

Net income rose to $61.7 million, or 36 cents a share, from $42.5 million, or 26 cents, a year earlier, the Santa Ana-based company said. Profit beat the 34-cent estimate of Raymond James analyst Brian Alexander. Sales grew 7.8% to $7.6 billion in the period ended April 1.

Chief Executive Gregory Spierkel has controlled costs by farming out customer service and technical support while moving into new markets, including home entertainment. The company held the rise in operating costs to 1.1%. Sales rose in all of the company's regions, led by Latin America.

Shares of Ingram Micro lost 3 cents to $19.25.

Sales in Latin America increased 28%, the Asia-Pacific region, which led the company the last two years, gained 12%, North America rose 9%, and Europe up 2%, held back by currency changes. Excluding the currency effect, European sales rose 11%.

Results included costs of $8 million, or 3 cents a share, for stock-based compensation. In March, Ingram Micro reiterated guidance for first-quarter net income of $54 million to $59 million, or 32 cents to 35 cents, including those costs, on sales of $7.3 billion to $7.5 billion.

Analysts had forecast first-quarter profit of 34 cents a share, the average of 14 estimates in a Thomson Financial survey. They had expected sales to rise to $7.41 billion from $7.05 billion a year earlier.

Second-quarter profit is expected to be $49 million to $56 million, or 29 cents to 33 cents a share, the company said. Sales are forecast to be $7.15 billion to $7.35 billion.

Analysts estimate 33 cents on sales of $7.26 billion, according to Thomson Financial.

Gross margin, a measure of profitability, narrowed to 5.34% in the first quarter from 5.38% a year earlier. Operating costs rose 1.1% to $306.6 million.

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