• Most Popular
  • Most Shared

Electronics distributors don't see more demand yet

Tue Jun 9, 2009 1:06pm EDT

Stocks

   

* Technology distributors see no green shoots outside China

* Ingram CEO says IT industry in middle of worst stages

* Falling prices could benefit distributors

By Georgina Prodhan and Paul Sandle

LONDON, June 9 (Reuters) - Electronics distributors are not yet seeing any improvement in demand for the roughly $350 billion worth of computers and components they channel to buyers worldwide every year except in China and a few niche areas.

At a conference in London, some of the world's biggest distribution companies 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.

"For people to start throwing out green-shoot messages, as a lot of people were doing two, three months ago, they are eating crow at this stage," Greg Spierkel, chief executive of the world's biggest distributor Ingram Micro (IM.N), told Reuters.

European distributors, such as Italy's Esprinet (PRT.MI), were even less optimistic. "So far, we don't see any major sign or any minor sign of improvement," CEO Alessandro Cattani told the meeting of the Global Technology Distribution Council.

Distributors are used by large technology vendors such as HP (HPQ.N), Dell (DELL.O) or IBM (IBM.N) to reach thousands of mainly smaller customers such as small firms and retailers, giving them insight over a broad customer base.

Roy Vallee, CEO of U.S. components distributor Avnet (AVT.N), described himself as a "card-carrying optimist" at the Tuesday conference, but said he saw no evidence of increased demand outside China.

"Outside of China's indigenous demand, which is being driven by their stimulus package, where else is demand actually up?"

"It's certainly not here (Europe), not the U.S, not Japan, so what we have is not restocking. It is a supply chain ordering again but ordering at a lower level than six months ago," he told Reuters.

Ingram's Spierkel agreed there was no evidence yet that IT demand was on the road to recovery.

"We are in the middle of the worst stages in the market for IT. In the coming months, if we haven't hit bottom we should be," he said. "But there's no way of knowing we've hit the absolute bottom."

Shipments of personal computers are expected to fall a record 12 percent this year, and cellphone sales are seen declining by 4 percent, according to research firm Gartner.

Some distributors said they could benefit from negative industry trends, such as falling average selling prices (ASPs) for electronic goods, which large suppliers would not consider worth their while selling directly.

"With ASPs going down, vendors don't want to put shoe leather on the street to move a $200 article," Spierkel said.

The next catalyst could be the approaching back-to-school season in late August and early September in the United States and most of Europe, which normally brings a spike in demand for computers and related products.

Esprinet's Cattani was not hopeful. "That the market may change is more wishful thinking than reality based on facts," he said. "Anyhow, let's hope for a good Christmas." (Editing by Rupert Winchester)



More from Reuters

 Paul Volcker arrives for a news conference where US President-elect Barack Obama (not pictured) presented his choices for his newly formed Economic Recovery Board in Chicago November 26, 2008. REUTERS/John Gress

Cheap cigars, politics and the Volcker Rule

He relishes cheap cigars, would rather take a bus than a taxi, and recently eloped. Meet Paul Volcker, the former Federal Reserve Chairman no one expected to be driving policy in the Obama administration.  Full Article 

    Trader John Boehm works in the 5-year US Treasury Bond Options Pit at the Chicago Mercantile Exchange September 16, 2008.  REUTERS/John Gress

    The big guns fire back

    The Wall Street behemoths that came close to collapse in the financial crisis are back and pushing aside the boutiques that made a killing during the turmoil.   Full Article 

    A banner painted with a skull and crossbones is seen during a demonstration in Damietta city, 200 kms northeast of Cairo, Egypt, June 17, 2008. REUTERS/Asmaa Waguih
    Reuters Breakingviews:

    Repo 105: Lehman's poison

    The autopsy of Lehman Brothers appears to have found many causes of death, including balance-sheet shenanigans, hubris, and a poison called Repo 105.  Commentary