PC Connection to disappoint Street

The direct marketer of personal computers and related accessories warns that third-quarter earnings will come in below expectations.

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PC Connection, a direct marketer of personal computers and related accessories, warned that third-quarter earnings would come in below Wall Street's expectations.

The company announced that net sales for the third quarter ended September 30 will be in the range of $165 million to $170 million, compared to $139.1 million, or 22 cents per share, for the year-ago quarter.

PC Connection anticipates that earnings per share for the third quarter will be in the range of 18 cents, 6 cents below analysts' consensus, according to First Call.

The company blamed lower net sales during the quarter on two factors. One, the conversion of its sales order management and fulfillment software to a new enterprise software system resulted in some loss of sales momentum during the first half of the quarter. And second, late in the quarter, product availability levels for certain models of computer systems were lower than anticipated.

"The completion of our software conversion was a significant achievement for our company," said Patricia Gallup, chairman and chief executive, in a statement. "Our principal operating systems are now well-positioned for future growth and expansion, as well as for Year 2000 compliance."

The company said that the lower-than-anticipated levels of availability of certain models of computer systems was caused by changes in Intel's processor manufacturing schedules, which resulted in lower supplies of these models throughout the distribution channel.

PC Connection anticipates that product availability is likely to improve during the fourth quarter.

"We believe that our current operating performance confirms the stability of our new enterprise software system and our core business," Gallup said. "We also continue to believe that annual revenue growth for fiscal 1998 will exceed 30 percent."

The company is scheduled to release its full third-quarter results the week of October 26.