Aggressive Ingram Micro pricing buoys sales, hits profits

News

Aggressive Ingram Micro pricing buoys sales, hits profits

Microscope contributor

Ingram Micro posted solid revenue gains in the third quarter on the back of a strong showing in its US homeland, but aggressive deals in Europe and Asia meant that profits fell short of analyst expectations.

The broadliner last night filed numbers for the penultimate quarter of 2010, with sales up 14% to $8.45bn, and profits rising 54% to $65m against a weak year ago period. This fell short of analyst forecasts of $66m but included a 2% currency headwind.

Greg Spierkel, CEO at Ingram Micro, described its North American region as the "star performer this quarter" with sales better than in any Q3 during the past decade "aided by solid post recessionary demand" across nearly all units.

Business in the region reached $3.65bn, up 13% while sales in EMEA grew 15% to $2.48bn, up 19% in Asia Pacific to $1.95bn and flat in Latin America at $372m.

Spierkel said every country in EMEA grew turnover in the double digits and even outstripped the emerging markets in local currency. However, the 11% negative impact of currency translations dampened the figures.

The hottest spots were in Western Europe with Germany, the UK, Sweden, Hungary, and the data capture/POS all posting growth above the regional average.

"In Europe we've grown substantially better than the market, we feel maybe 50% better than the overall IT market is growing for hardware and software, some of that coming with some volume-based relationships," he said.

For some months, rivals have complained - behind closed doors - of an Ingram Micro-led price war across a variety of product areas. The impact of this could be seen in Europe's operating margin which was 0.76% of sales.

In Asia, the expansion of rivals into new countries saw competition heat up as distributors tried to capture market share.

Spierkel said the enterprise refresh, which he reckoned had been strong for three to four quarters, was set to continue following significant declines in spending during 2009 and 2009.

"There is still a refresh going on beyond the PC around servers, storage, networking and enterprise software upgrades that is holding fairly firm and feels good going into the New Year," he said.

However, he also noted the slowing of growth in the consumer space - a trend picked up by Gartner and IDC recently - with single digit rises expected with handhelds and tablet "starting to displace some of the lower end of the market".

Spierkel concluded: "As we round the final lap of 2010 a solid finish is expected ahead, we are tracking to a highly successful year of above industry growth and profitability.


Join the conversation Comment

Share
Comments

    Results

    Contribute to the conversation

    All fields are required. Comments will appear at the bottom of the article.