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Ingram Micro Sees Weak Demand, Projects Slower Sales in Q4

Santa Ana’s Ingram Micro Inc., the world’s biggest distributor of technology goods, software and consumer electronics, gave a bleak outlook for the balance of the year and into 2009 on the heels of its third-quarter results.

For the first time in recent memory, Ingram Micro didn’t give a range of figures for its financial expectations.

Chief Executive Greg Spierkel did, however, make some comments about the current quarter,most of which were pretty bleak.

He cited slowing demand for technology goods, shrinking sales growth and more charges ahead related to cost-cutting.

“We believe that the softer global economy will continue well into next year, which will dampen the demand for technology products and services,” Spierkel said. “We will continue to pursue optimization actions that will create a stronger, more agile company for the future, but these efforts may have a negative impact on sales in the near term. In light of the current unpredictability of the global markets, we have decided to discontinue our issuance of specific, financial quarterly guidance.”

Spierkel said he expects “softening demand due to global macroeconomic forces to have a negative impact on sales growth into 2009.”

For the current quarter, Wall Street is looking for profits of $80 million on sales of $10 billion.

The company is set to continue its cost-cutting program, which is expected to save $18 million to $24 million a year.

Ingram has been focusing on cutting freight expenses and exiting unprofitable businesses around the world.

Spierkel said it may look to shutter “underperforming retail accounts in the U.S., Europe and China.” He didn’t name the stores.

The company is set to continue its strategy of investing in service offerings for its customers that help offset the razor-thin margins it nets in its distribution business.

The outlook comes after Ingram posted third quarter results that were down from a year ago but beat analysts’ profit expectations.

Ingram posted sales of $8.3 billion, down 4% from the same period a year earlier and in line with analysts’ expectations.

Revenues included a boost when results from abroad were translated into dollars.

Including about $4 million in charges related to a cost-cutting program in North America and Europe, the company reported profits of $46 million, down 36% from the year-ago quarter but beating analysts’ expected $38 million in profits.

“Our proactive steps to walk away from unprofitable business and recover freight costs, combined with softening demand in our three largest regions, had a negative impact on worldwide sales growth,” Spierkel said.

Ingram said at the end of the quarter it had the highest amount of cash on hand in four years, for a total of about $807 million.

The company’s shares, which are off some 38% in the past year, closed down 32% on a recent market value of about $2 billion.

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