Ingram Trims Workers; More Cuts to Come?
By ANDREW SIMONS
Santa Ana-based Ingram Micro Inc. made a small number of cuts to its Orange County workforce last month, and workers say they expect more layoffs even after last year’s big downsizing.
Twenty workers were affected in the latest round, all in the company’s corporate group, according to spokeswoman Jennifer Baier.
“We had to make some hard decisions,” she said.
The March layoffs could presage a larger round of cuts, according to one employee. Baier wouldn’t comment on Ingram Micro’s staffing plans.
The latest cuts come after a hard year for the distributor of computers and other electronics. Ingram cut its OC workforce by 34% in the past year and companywide employment by 12%. Ingram counts 2,300 OC workers and 14,500 overall.
Ingram eked out a profit in the fourth quarter, but sales declined. Ingram’s net profit fell 75% to $14.4 million in the quarter, while sales slipped 24% to $6.14 billion vs. a year earlier. The company cited the severe slowdown in technology for its revenue decline.
“2001 was a tough year for the entire (information technology) industry,” Chief Executive Kent Foster said in the company’s most recent earnings statement.
Ingram is set to report its first-quarter results on Thursday.
The company managed to reduce its inventory by $1.2 billion or 44% last year. Ingram also closed its Fullerton distribution center, moving work to a new, massive facility in Mira Loma.
The company’s cost-cutting also has included the elimination of some special concessions for favored customers.
“Anything we weren’t getting paid for, we took a look at that,” said Michael Grainger, Ingram’s president, in an earlier interview. “It’s a part of our culture now.”
Grainger declined to comment during that interview on whether the company plans further layoffs, except to say, “I never say never.”
As a result of driving down costs, Ingram’s gross profit margin in the fourth quarter climbed to 5.27%, 14 basis points better than in the year-ago quarter.
“That’s what investors see,” Grainger said. “They see that we’re positioned to take advantage when business turns around. They’re going to see that a lot of the money we get at the top will go right to the bottom line.”
Wall Street seems to be betting on a comeback. Ingram’s share price gained 15% from its year low in September, trading near 17 last week.
“It is a leading indicator for the technology sector,” said Matthew Sheerin, an analyst with San Francisco’s Thomas Weisel Partners LLC. “Investors are trying to play the upturn, and they’re looking for the best companies going into it.”
Because Ingram distributes products from all major personal computer makers, the company represents a diversified technology investment, Sheerin said.
Ingram’s profit margin gains come after two years of falling computer sales and prices. Computer sales fell 6.3% last year, according to market researcher International Data Corp.
Ingram also took steps to stay competitive with Tech Data Corp., its aggressive Clearwater Fla.-based rival. Ingram recently bought Singapore’s Electronic Resources Ltd. and Germany’s Macrotron AG, both of which increased the company’s presence in those regions. Ingram is looking at more acquisitions in the coming year, Grainger said.
