Ingram Micro Inc. Chief Executive Alan Monie has identified several key areas for improvement since taking the helm of the world’s largest electronics distributor a month ago.
A concentration on higher-margin business lines and continued efforts to smooth out a software and logistics systems overhaul top the list, Monie told analysts and investors following the company’s recent fourth-quarter earnings report.
“I’m highly confident that I have taken the reins of a company that is in overall solid shape,” he said. “But I am also well aware that there are several areas of focus where we need to drive faster and improve the execution. I intend to ensure we do.”
The Santa Ana-based company is the biggest distributor of computers, software and other technology products in the world and the largest public company based in Orange County by revenue, with more than $36 billion in sales in 2011. It relies on thousands of resellers to sell goods and services.
Projections
Ingram Micro projects annual revenue growth of 4.5% to 6.5% through 2015 to about $42 billion.
Monie listed three underlying goals the company must meet to hit the projected revenue mark:
• Improve productivity to grow sales and margins for high-volume business lines,
• Grow higher-margin specialty businesses and
• Continued investments in innovation, exemplified by cloud services the company rolled out last year.
Monie spent considerable time addressing concerns about the ongoing systems overhaul, which was designed to improve automation, operations and services for customers and vendors.
The changeover went smoothly in Singapore, New Zealand, Chile, the Netherlands, Belgium and Indonesia, but problems installing software and hardware at its Australian operation dogged the company for most of 2011, dragging down earnings in the process.
Controlled Approach
Ingram Micro spent months fixing the glitch and appeared to clear the hurdle, but Monie alluded to continued challenges facing customers using the new system, which integrates data on several facets of an operation, including development, manufacturing, inventory, sales and marketing.
“We have seen a number of things that we need to fix and that we need to improve,” said Monie, who recently visited the company’s four major business regions around the globe.
Ingram Micro will take a “very controlled” approach on completing the installations of new systems and upgrades in regions they’ve already been put in place, according to Monie.
“It is critical that our future implementations do not impact our standing in our customers’ minds,” he said.
Ingram Micro has struggled to regain customers lost to other competitors in the region following the setbacks in Australia, the company told the Business Journal in previous interviews.
Chief Financial Officer William Humes reiterated that point in the conference call.
“Gaining back the customers continues to be the challenge,” Humes said. “We made some progress in Q4 from Q3, and we expect hopefully to make some progress going forward. But I think it’s going to take a little bit longer.”
The Australian operations got a boost shortly after the fourth-quarter earnings report, when word surfaced that Ingram Micro signed a deal to sell products from Cupertino-based Apple Inc., a first for the company in that region.
• Headquarters: Santa Ana
• Business: technology products distributor
• Founded: 1979
• Ticker symbol: IM (NYSE)
• Market value: About $3 billion
• Notable: new CEO aims for $42 billion in sales by 2015
Q4
Ingram reported fourth-quarter revenue and adjusted profits that beat Wall Street expectations.
It grew sales to $9.95 billion in the recently ended quarter, up less than 1% percent from a year earlier. Adjusted profits hit nearly $105 million, down 8.6% from a year ago.
Monie’s comments in the conference call provided some of the first insights into his management style since replacing Gregory Spierkel, who announced his resignation on Jan. 19.
Investors should be pleased to hear Monie’s main priority is execution, which can be characterized as “choppy” over the past several quarters, said Brian Alexander, technology-research director at St. Petersburg, Fla.-based Raymond James & Associates.
“While Mr. Monie stated that there is much work to be done, particularly around the [systems overhaul, the company’s strategy of driving growth in higher-margin adjacencies remains intact,” he wrote in a note to investors.
Recent Travels
Monie, 61, rejoined Ingram in November as president after a year heading a manufacturer in China before being promoted. He first joined Ingram as executive vice president in January 2003 and was appointed president of the Asia-Pacific region a year later.
He was named president and chief operating officer in 2007 and remained in those posts until last year, when he became chief executive of Asia Pacific Resources International Ltd., a China-based manufacturer of fiber, pulp and paper.
The positions had remained unfilled until Monie’s return. The COO slot remains vacant.
Monie’s prior stints include heading Latin American operations at Honeywell International and Asia-Pacific operations at Allied Signal Inc., where he led the company’s expansion into China and India.
