Arrow Misses 1Q Earnings Forecast

The Melville, N.Y.-based company reported a profit for the quarter of $57.2 million, or 47 cents per diluted share, compared with a Thomson Financial consensus earnings projection of 54 cents per share. Excluding special charges, Arrow would have earned $58.7 million, or 49 cents per diluted share. In its 2004 first quarter, Arrow posted earnings of $29.5 million, or 27 cents per diluted share,

On the sales side, Arrow's revenue for the first quarter of 2005 came in at $2.73 billion, up from $2.63 billion a year earlier.

"Our initiatives to be better organized, lower our cost structure and manage working capital more efficiently continue to drive improving operating results," said Arrow President and CEO William Mitchell in a statement.

Worldwide computer products sales were $632 million, a 7 percent increase over last year. "Our North American Computer Products businesses' focus on expanding its product offerings and outgrowing the market while strictly managing costs has resulted in their 15th consecutive quarter of year-on-year growth in operating income," according to Mitchell.

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Arrow previously announced that it would take steps to better optimize the use of its mainframe as well as reduce real-estate costs and boost efficiency in its distribution centers. The actions are expected to further cut costs by about $50 million on an annual basis, with $40 million to be realized in 2005, the company said. Roughly $7 million of the expected 2005 cost reduction was achieved in the first quarter, but the estimated charges associated with those actions totaled about $2.6 million net of related taxes in the first quarter, according to the distributor.

For the second quarter ending June 30, Arrow forecasts revenue of between $2.7 billion and $2.8 billion and earnings of 49 cents to 53 cents per share, according to CFO Paul Reilly. Financial analysts project $2.84 billion in sales and earnings of 56 cents per share.

Arrow shares were trading at $23.88, down 13 cents per share, in Wednesday afternoon trading.