Ingram Micro meets analysts' hopes

With PC sales performing well, Ingram Micro reports a second quarter that hit Wall Street's expectations and attained a new record high.

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Thanks to robust PC sales, Ingram Micro (IM) hit analysts' expectations for the June quarter and attained a new record high.

The company's stock gained 3/8 to close at 28-7/8 from yesterday.

For the second quarter ending June 28, net income was $40 million, or 27 cents a share, up from the $26.8 million, or 22 cents a share, reported in the same quarter last year. Wall Street's expectations were 27 cents a share, according to First Call.

Excluding a noncash charge of $1.4 million, related to the vested portion of previously granted stock options that had converted to Ingram Micro stock options, net income for the second quarter was $41.4 million, or 28 cents a share.

The company posted record second-quarter net sales of $3.72 billion, up 33 percent over the $2.79 billion achieved in the same quarter last year.

"It was a very solid quarter," said Steve Fortuna, an analyst with Deutsche Morgan Grenfell, noting that the results were being driven by good demand--particularly demand for personal computers--and increased market share. "Companies like Ingram Micro and Tech Data are taking market share from smaller players--and on a global basis."

The distributor of technology products and services currently operates in 19 countries and distributes products to more than 100,000 resellers in 120 countries.

The company's recent acquisition of Intelligent Electronics will provide a boost in revenue going forward, he added.

But, it will be difficult to maintain that kind of growth, especially for a company that is already generating billions of dollars in revenue. Fortuna expects 33 percent growth in the third and fourth quarters of 1997, and about 20 percent growth arena after that.

"It is tough to sustain that growth rate. But, there are still lots of opportunities in the U.S., Europe, Latin America, and in the Asia Pacific region," he said.

Ingram Micro recently announced it will distribute Sun Microsystems' (SUNW) line of software products in North America. Compaq named Ingram Micro as one of the nine sales channel partners in its build-to-order personal computer production and distribution strategy.

On July 21, Ingram Micro completed the acquisition of Intelligent Electronics' indirect business, the Reseller Network Division (RND). Ingram Micro assumed $78 million in liabilities in excess of current assets. At the close of the transaction, Ingram Micro also became the primary wholesaler to Intelligent Electronics' direct sales organization and reseller, for an initial term of up to three years.