Avnet CEO says worst behind, sees recovery in '10

* CEO stands by co's Q4 outlook

* Sees further growth in China

By Mansi Dutta

BANGALORE, June 23 (Reuters) - Electronic components and computer products distributor Avnet Inc (AVT.N) sees the company coming off the bottom in the second half of the year and expects a slow recovery ahead, according to its chief executive.

Avnet, which distributes products for companies including IBM Corp (IBM.N) and Hewlett-Packard Co (HPQ.N), has been posting weak results for the past several quarters and cutting costs as the $350 billion industry reels under global meltdown.

"We believe that the worst is behind us, and we are at or near the bottom," Chief Executive Roy Vallee said in an interview with Reuters.

Vallee said he expects margins beginning to stabilize and grow in 2010 despite near-term pressures.

Avnet, which competes with Ingram Micro (IM.N) and Arrow Electronics Inc (ARW.N), also stood by its outlook for the fourth quarter.

In April, Avnet had forecast a profit of 30 cents to 38 cents a share for the fourth quarter ending June.

Rival Arrow recently slashed its revenue outlook for the current quarter amid concerns in its European components business. [nWEN9969]

Even though analysts are spotting the first signs of a recovery in technology spending, electronics distributors around the world are not yet seeing any improvement in demand except in China and a few niche areas.

At a recent industry conference in London, some of the world's biggest electronic parts distributors said the supply chain for electronic goods was moving again after practically grinding to a halt, but it was too early to speak of any broad-based recovery. [nL9477131]

CHINA GROWING

Vallee said he sees the North American business, which accounted for 46 percent of the company's overall revenue in the third quarter, stabilizing on a sequential basis but contracting on a year-over-year basis. "In Europe, we are still seeing declining demand albeit at a lower rate," he said. "I would guess that by the end of this calendar year Europe would stabilise as well."

Europe, the Middle East and Africa (EMEA) contributed about 34 percent of the electronics components and computer products distributor's revenue in the last quarter.

"Asia, specifically China, is the one place where there is clear demand growth taking place," Vallee said.