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UPDATE 2-Avnet says cut jobs in 1st qtr, more may follow
October 25, 2012 / 1:41 PM / 5 years ago

UPDATE 2-Avnet says cut jobs in 1st qtr, more may follow

* Sees second-quarter adjusted earnings of $0.79-$0.89/share vs est $0.77

* Sees second-quarter revenue of $5.95 bln-$6.65 bln vs est $6.24 bln

* Shares up 2 percent

By Sruthi Ramakrishnan

Oct 25 (Reuters) - Electronic products distributor Avnet Inc said it reduced its workforce in its Americas operations and signaled more job cuts as revenue weakens with customers holding back on orders.

Avnet, like other technology distributors Arrow Electronics Inc and Ingram Micro Inc, has been hit by weak demand for the past few quarters, underscoring a slowdown in technology spending.

The company, which forecast better-than-expected second-quarter earnings, said it had cut $90 million in costs as of Sept. 29, a move that will shore up current-quarter earnings.

Avnet, considered a bellwether for corporate technology spending, said in August that it would cut costs by between $40 million and $50 million on an annualized basis.

“If we are making cost reductions, it ends up actually impacting our headcount,” Chief Executive Rick Hamada told Reuters, adding that 70 percent of the company’s expenses are people related.

Hamada said the company currently has about 17,000 employees. It had about 19,100 employees, as of June 30.

He said additional reductions were unlikely to match the $90 million in cost reductions already undertaken, but will “very likely” affect headcount.

The company has two divisions -- one supplies components to manufacturers and the other distributes products made by companies such as IBM Corp, Apple Inc and Hewlett-Packard Co to corporations and resellers.

Avnet forecast adjusted earnings per share of 79 cents to 89 cents for the current quarter on revenue of $5.95 billion to $6.65 billion. Analysts on average expect earnings of 77 cents per share on revenue of $6.24 billion, according to Thomson Reuters I/B/E/S.

The company said its first-quarter results were affected in particular by weak demand in the Americas.

“Key segments of our served markets slowed during the quarter beyond our initial expectations, leading to a dramatic impact on our bottom line results as our revenues in the higher-margin western regions declined double-digit percentages year over year,” Chief Executive Rick Hamada said in a statement.

First-quarter net income fell to $100.3 million, or 70 cents per share, from $139 million, or 90 cents per share, a year earlier. Excluding items, the company earned 59 cents per share.

Revenue fell 8.7 percent to $5.87 billion .

Analysts had expected earnings of 58 cents per share on revenue of $5.89 billion.

Shares of the Phoenix, Arizona-based company were up 2 percent at $28.51 on the New York Stock Exchange on Thursday.

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