IM: Ingram Micro Guidance Looks Uninspiring for Tech Shares
Although it is a member of the Stock Market Beat Small Cap Watch List (Track at Marketocracy) and Mid Cap Watch List (Track at Marketocracy), computer wholesaler Ingram Micro is the world’s largest computer distributor. As a result, it is a useful gauge of the health of the entire IT industry when the company reports earnings:
Worldwide sales for the fourth quarter were $8.85 billion, an 11-percent increase from $7.96 billion in the prior-year period. The translation impact of the relatively stronger European currencies had an approximate three-percentage-point positive effect on comparisons to the prior year. Sales for the 2006 fiscal year were $31.36 billion, a 9-percent increase over 2005 and an all-time record.
After accounting for a few factors that had not been factored into the guidance, the results were slightly ahead of the consensus estimate of $8.55 billion in sales and $0.53 EPS. The company also provided guidance for the current quarter:
* Revenue of $8.10 billion to $8.35 billion. (Consensus = $8.04 billion)
* Net income of $63 million to $70 million, or $0.36 to $0.40 per diluted share. (Consensus = $0.40)
With operating margins less than 1.5% of sales, it is very easy for small changes in the expense structure to translate into big earnings swings. More important is the revenue estimate, which marks an expected 6.5% improvement. That amount is acceptable, but hardly enough to spur hopes of a rally in tech shares. It is also a dropoff from the 11% fourth quarter growth, despite the much anticipated consumer launch of Windows Vista.
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[...] Dell Reports Preliminary Revenue of $14.4 Billion; Preliminary Earnings Per Share of $0.30: Financial News – Yahoo! Finance Dell (DELL) reported preliminary results for the fourth quarter of fiscal year 2007, with revenue of $14.4 billion, operating income of $801 million, and earnings per share of $0.30. Dell ended the quarter with $12.5 billion in cash and investments. That revenue number marks a decline of more than 5% on a year/year basis. And with Dell shrinking, and both Hewlett Packard (HPQ - Annual Report) and Ingram Micro (IM) expecting revenue growth to slow, we wouldn’t be surprised if the industry as a whole posted lower revenue in the quarter. It wouldn’t be hard, as Gartner was already forecasting it would be flat. Dell appears to have a smaller slice of what may be a smaller pie. This despite the Windows Vista launch. [...]