Ingram, Avnet see sales drop

It’s been another bad news/good news kind of week.

Following on the heels of Arrow‘s announcement that fourth-quarter sales had declined 22 per cent, Ingram Micro reported that its Q2 sales were down 25 per cent. But, like Arrow, it’s not all bad news.

While Arrow was seeing some signs of stabilization in its business, Ingram said sales fell just two per cent from first-quarter sales, which is “normal” for the season. This is also a pattern it expects to continue into the third quarter, which means things aren’t getting worse – and that’s good news.

Avnet followed up by announcing its fourth-quarter earnings this week, which were below expectations with a US$30.9 million loss. Its IT division, Avnet Technology Solutions, saw sales decline 15.9 per cent (and 17.6 per cent in the Americas). Still, compared to Arrow and Ingram, that’s not actually so bad. Avnet also blamed its lower-than-expected results on restructuring and integration initiatives that cost US$78.9 million.

While it’s unlikely any of these disties felt like partying it up after announcing these results, they may have breathed a sigh of relief. While sales are down, it seems there are some signs of stabilization, and the worst may be over – though many industry watchers and analysts don’t expect to see true signs of recovery until 2010.

But Ingram caused a bit of a kerfuffle during its earnings call with analysts, when CEO Greg Spierkel talked about placing greater emphasis on incremental sales with more bias toward increasing share capture, and getting “a little aggressive” with volume commodity product.

This sparked speculation that Ingram was going to wage a price war in the channel. This was only speculation, of course – so far, there have been no reports of changes to Ingram’s pricing. But the power of speculation is amazing. The brouhaha was enough to make the distie’s stock drop more than nine per cent the following day.

These comments and aggressive stance do seem a little out of line with Ingram’s position as a value-added distributor – not one that prides itself on the cutthroat low-price high-volume model. Then again, execs were in an awkward position. After all, their numbers were worse than all of their competitors.

Perhaps these words were spoken to display a certain confidence about the future, to show that they’re being proactive despite their poor sales results. But it certainly got people talking – just maybe not in the way Ingram intended.

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Jim Love, Chief Content Officer, IT World Canada

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Vawn Himmelsbach
Vawn Himmelsbach
Is a Toronto-based journalist and regular contributor to IT World Canada's publications.

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