Shares of Santa Ana’s Ingram Micro Inc., the largest distributor of technology goods, software and consumer electronics, got dinged on Friday after an analyst downgraded the stock.
Investors sent shares down nearly 9% near the close of trading on a recent market value of about $3 billion.
Citigroup Inc. analyst Richard Gardner downgraded the stock to “hold” from “buy” on concerns that the company would see profits shrink as it looks to grow market share.
Chief Executive Gregory Spierkel said in an interview with Reuters that the company was looking to increase business in Sweden, several other European countries and in Asia.
Some on Wall Street fear Ingram will cut prices to gain customers at the expense of its already slim profits, according to a Reuters report.
Spierkel on Thursday gave a cautious outlook for the current quarter.
He said the company doesn’t “anticipate an economic rebound in the near term” but expects to see some benefits from a big cost cutting program that it wrapped up earlier this year.
“While the demand picture is not deteriorating, we believe that the road to recovery will be protracted over a number of quarters as unemployment weighs on the confidence levels of consumers and small businesses,” he said. “Our customers are fundamentally sound, but they remain understandably cautious until more economic indicators turn positive.”
The company has been hit by a double-whammy during the downturn as corporations and consumers pull back on their technology spending and prices for technology goods fall amid slumping demand.
Ingram’s bread-and-butter business gets the slimmest of profits,it nets pennies on the dollar.
The tepid outlook comes on the heels of Ingram Micro’s second-quarter results which were announced on Thursday after the close of trading.
Results fell short of Wall Street’s expectations on sales but beat on profits.
For the current quarter analysts are looking for profits of $36 million on sales of $6.8 billion.
