Avnet shares fell more than 10 percent in premarket trading Wednesday after the Phoenix-based distributor said its first fiscal quarter sales would be at the lower end of its expectations.
Avnet also said it planned cost-cutting moves on top of the $40 million to $50 million in expense reductions it announced in August. It appears layoffs may be included in the cuts, although the company did not elaborate in a statement.
"We are evaluating resource commitments across the portfolio and have identified further expense alignment actions," CEO Rick Hamada said in the statement. "We remain steadfastly committed to monitoring market developments and taking actions consistent with the pursuit of our long-term operating goals."
Avnet said it now expects revenue to be approximately $5.85 billion, including $3.65 billion for Electronics Marketing and $2.2 billion for its Technology Solutions business unit. Earnings, excluding restructuring charges, will be between 52 cents and 58 cents per share.
Analysts' consensus estimates were for $6.07 billion in sales and earnings of 83 cents per share for the September-end quarter.
Avnet indicated that revenue was most notably lower in Technology Solutions, while lower gross profit margin in Electronics Marketing also was associated with a weaker sales environment.
"The shortfall to our expectations was more acute at our [Technology Solutions] business, where we experienced a second consecutive quarter of weaker than expected transaction activity at the end of the quarter as customers delayed IT projects," Hamada said in the statement.
Avnet plans to release its full first-quarter earnings on Oct. 25.
Avnet's shares were trading at $25.44, down $3.13 in Wednesday morning trading.
PUBLISHED OCT. 10, 2012