Ingram To Tighten Belt Again

"A few years ago, our biggest challenge was to keep up with growth. We built a massive footprint to keep up with that growth," said Kent Foster, chairman and CEO of the distributor, based here. Now the footprint is too big, he said.

Ingram Micro expects to save $160 million annualized by 2004 through a series of cost-cutting measures made necessary by declining revenue and a slower economy, executives said.

Ingram Micro did not detail the measures, which will be announced over the next few months and may include layoffs and facility closures,similar to actions taken earlier this year.

In August, Ingram Micro centralized its credit organization in Buffalo, N.Y., which resulted in some layoffs. The distributor also consolidated a configuration center in Memphis, Tenn., and a Pennsylvania returns center into existing distribution centers. Ingram Micro may move more operations to the East Coast, sources close to the company said.

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"We always will have our headquarters in Santa Ana. We have a huge amount of intellectual capital here, and that's not going to change," said Ingram Micro President and COO Mike Grainger.

Analysts expect Ingram Micro's 2002 revenue to drop 25 percent vs. 2001 fiscal revenue of $25.19 billion. The company has 13,500 employees, down 18 percent from two years ago and 7 percent year to date.

"Our company is more nimble than it was a short time ago. There's still plenty of room to grow and to focus on profitable growth," Foster said.

Most solution providers will see benefits through lower costs and tighter relationships with the distributor, Foster said, but some measures have upset customers. Ingram Micro recently cut credit lines to some solution providers after a third-party audit of its credit resources.

"Two years ago, Ingram Micro started doing business with a lot of small businesses. I guess they don't want that business anymore," said Pat Walsh, owner of Computer Station of Orlando, Longwood, Fla.