Arrow Electronics is the latest company to feel the squeeze from the sluggish economy. The Melville, N.Y.-based distributor missed third-quarter expectations and drastically reduced its forecast for the current quarter.
Arrow earned $76.1 million, 63 cents per diluted share, in the third quarter ended Sept. 30, on $4.30 billion in sales. The company's results included $7.6 million in restructuring charges that lowered earnings by 6 cents per share. Wall Street analysts, who exclude charges in their forecasts, had predicted earnings of 76 cents per share. Arrow did beat revenue expectations of $4.25 billion.
"The volatility in the world's economies and the virtual shutdown of the credit markets made the third quarter especially difficult. We fell short of our [earnings per share] guidance due to a changing product mix and competitive pricing pressure," said William Mitchell, chairman and CEO, in a statement. "There is no doubt that market conditions will continue to be challenging, and in response to the rapidly changing environment, we will make the appropriate and necessary decisions and adjustments to our business model to ensure continuing and profitable success and long-term sustainability."
Arrow's Enterprise Computing Solutions sales increased 12 percent to $1.31 billion. Sales were strong in storage, software and services, which offset weakness in server revenue, according to Mike Long, president and COO.
"The increasing uncertainty in the global macroeconomic environment has caused IT spending to soften and as a result, our customer base became more cautious in the latter part of the third quarter," Long said in a statement.
For the current fiscal quarter, Arrow predicts earnings between 60 cents and 68 cents per share on revenue of $4.05 billion to $4.45 billion. Analysts were predicting earnings of 89 cents per share on revenue of $4.54 billion.
"Given the poor economic conditions and unprecedented volatility in the financial markets, our visibility is more limited than normal. Taking this into account, we believe it is prudent to provide a wider than normal guidance range to account for the greater degree of uncertainty," said Paul Reilly, senior vice president and CFO, in a statement.
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