Special Charges Lead to Avnet 4Q Loss

Avnet

The results include special charges of $62.1 million related to the acquisition of Kent Electronics, the write-down of investments in Internet-related businesses and severance costs.

Excluding the charges, net income was $683,000, or 1 cent per share, compared with $545,000 in earnings, or 5 cents per share, for the same year-ago period. Thomson Financial/First Call projected break-even earnings before special charges.

"We're pleased to see a return to profitability before special items in our fiscal fourth quarter, despite experiencing a second consecutive quarterly decline in sales," said Roy Vallee, Avnet chairman and CEO, in a statement. "Fourth quarter revenue was down over $390 million year over year, and yet our team managed their way to profitability. This is a reflection of our global team's ability to manage through this difficult market environment."

Sales of microprocessors and disk drives sold into the white-box market declined by about $100 million on a sequential quarterly basis, due to excess inventory in the white-box PC supply chain, according to the company.

The sequential revenue declines were offset by slight growth in the sales of electronic components, enterprise computing products and embedded systems into the non-PC OEM market, Vallee said. Total revenue was down $70 million sequentially.

Avnet expects the first quarter to be flat compared with the June-end quarter due to seasonality issues in the summer.

"We anticipate that the December 2002 quarter will yield improved financial results, due primarily to the historic seasonal strength that normally accompanies our computing businesses," Vallee said. "After that, we expect to see gradual improvements in the technology markets we serve."

Avnet Computer Marketing, which includes enterprise distributor Avnet Hall-Mark, reported $570.9 million in revenue for the quarter, compared with $619.7 million in the year-ago quarter. For the 2002 fiscal year, Avnet Computer Marketing had $2.4 billion in sales, compared with $2.86 billion in fiscal 2001.

Shares of Avnet closed at $15.32, up 37 cents, or 2.5 percent, Wednesday.