Ingram Micro Consolidates

As part of its ongoing efforts to reduce costs and eliminate redundancies, Ingram Micro is unifying its U.S. and Canadian operations into a single North American region to leverage existing infrastructure in both locations. The consolidation will be effective Jan. 2, 2002.

Financially, the company posted sales of $5.83 billion, excluding special items, for the third quarter ended Sept. 29 vs. $7.56 billion earned during the same period a year ago. Net income for the quarter, excluding special items, was $5.4 million, or 4 cents per share, which beat First Call projections of a loss of 2 cents per share.

Including the special items, Ingram Micro posted a loss of $13.3 million, or 9 cents per share, compared with $38.9 million, or 26 cents per share, earned during the same period last year. Part of that included an $18.7 million special charge for reorganization costs and other write-offs.

Earlier this year, the distributor embarked on an extensive cost-reduction plan, which executives say is still under way. The plan included a 10 percent reduction in head count, reorganization of several internal departments and consolidation of some of its distribution centers. Ingram Micro expects to see $15 million to $20 million in savings annually as part of these efforts, said executives.

"Our goal is to have the infrastructure for today and the future," said Ingram Micro COO Mike Grainger.

"Ingram Micro is doing a good job under the circumstances," said Guthrie Chamberlain, president and CEO of Eagle Technologies Group, a Marietta, Ohio-based solution provider. "We haven't had any real issues with them and, with everything that's going on in the world, that's probably saying something."

Because of the cost cuts, Ingram Micro is becoming a more nimble player in the channel, said company executives. "We believe that we are gaining market share in the VAR market," said Kent Foster, Ingram Micro CEO.

However, the company expects to have a difficult time weathering the economic and industry slowdown through the fourth quarter. "IT sales will continue to be slow, and consumer confidence will be weak through the holidays," said Grainger.

The consolidation is expected to give Ingram Micro more leeway to utilize expertise and efficiencies on both sides of the border, while aiding its cost-cutting objectives, said company executives.

Kevin Murai, Ingram Micro U.S. president and former president of Ingram Micro Canada, will head up the new organization as North American president. The company plans to build a single management team for the North American region that will operate with "a unified focus" for building efficiencies and expanding products and services, executives said.

While the company expects to see the most benefit in product management, customer programs, logistics services, finance and operations, Ingram Micro also acknowledged there will be duplications in both regions, said executives.

"Obviously, if there's a duplication, we'll want to eliminate that duplication," said Grainger. However, he would not speak specifically about any region, department or process.

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