Arrow Electronics 3Q Profit Down 83% On Charges, Lower Revenue

Arrow Electronics Inc.'s (ARW) third-quarter profit slid 83% on lower revenue and falling margins, as well as higher restructuring charges.

The distributor of semiconductor products to computers and electronics makers has rushed to cut costs to keep up with declining sales in recent quarters. Though chip demand has started to improve and prices are recovering as manufacturers cut output, some analysts say the growth is mostly due to inventory corrections.

Arrow posted a profit of $12.6 million, or 10 cents a share, down from $76.1 million, or 63 cents a share, a year earlier. Excluding restructuring and other charges, earnings fell to 37 cents from 70 cents. Revenue dropped 15% to $3.67 billion.

In July, the company projected earnings of 25 cents to 37 cents on revenue of $3.1 billion to $3.7 billion.

Gross margin slid to 11.5% from 13.1%.

Global component sales were down 15% while global enterprise computing solutions sales fell 13%. Profits dropped 41% and 18%, respectively. Chief Executive Michael Long said global components sales posted double-digit sequential increases across all regions, and noted year-to-year declines have begun to moderate in North America and Europe, while Asia continues to post gains.

Looking ahead, Arrow sees fourth-quarter earnings of 44 cents to 56 cents a share on revenue of $3.65 billion to $4.25 billion. Analysts polled by Thomson Reuters expected 51 cents and $3.76 billion, respectively.

Arrow's stock was inactive in premarket trading, at $27.62. Shares are up 47% this year.

-By John Kell, Dow Jones Newswires; 212-416-2480; [e-mail]