Ingram Reaffirms 2Q Guidance, Sees Room to Grow

Company executives said they expect earnings of $21 million (or 13 cents per share) to $25 million (16 cents per share) on revenue of $5.6 billion to $5.8 billion in the quarter. That forecast would mean year-over-year growth of 8 percent to 12 percent for the quarter, according to the company.

Kent Foster, Ingram Micro chairman and CEO, said the company will continue to increase its services business while seeking to expand its share of the two-tier distribution business in the industry. "[Research firm] IDC did a study for us [finding] that in a trillion-dollar IT market, two-tier is one-fifth of the market. There is modest expansion available there," Foster told analysts. "We can move into other areas that are very close to where we are today. There are other vendors that can use our services. We believe that enlargement of the pie is starting to occur."

For example, Acer has become very channel-friendly and has gained market share in many parts of the world, Foster said. "Vendors don't need to invest in direct-sales forces and distribution centers. IBM told us that two-tier costs no more and, in many cases, it costs less than going direct," he said.

In the past four years, Ingram Micro has reduced its days of working capital from 25 to 18, Foster said, noting that each one-day improvement translates into $65 million in additional cash. "That has reduced our debt requirements from 36 percent four years ago to 18 percent now," he said.

Ingram Micro also aims to increase its operating margins in North America from 91 basis points in the fiscal first quarter to 150 basis points within 12 months, Foster added.