Avnet takes impairment blow as Arrow hits targets

Two of the world’s largest distributors experienced contrasting fortunes this week: while Avnet has been forced to take a $1.3bn goodwill impairment charge, rival Arrow announced that it successfully hit its targets for its fourth quarter.

Avnet confirmed it has recognised a non-cash, pre-tax goodwill impairment charge of $1.317bn in its second quarter results, to reflect the steep decline in its share price since September.

It has also recognised a $31m non-cash impairment charge related to the carrying value of certain intangible assets.

The two charges dragged the New York-listed distributor to a $1.202bn net loss for the three months to 27 December, compared to the net profit of $112m it originally reported on 22 January.

Meanwhile, Arrow gave investors some cause for cheer as it hit the, albeit bearish, targets it had set itself for its fiscal fourth quarter.

The distributor saw net profits fall from $114m to $43.2m year on year in the three months to the end of December. Revenues tumbled 7 per cent to $4.09bn. With its recent acquisition of European distributor Logix stripped out, Arrow’s revenues fell 12 per cent year on year.

Boosted by the Logix acquisition, enterprise computing solutions sales rose 2 per cent to $1.64bn, while components sales fell 13 per cent to $2.45bn.

However, the distributor disappointed with its guidance for its current quarter. Arrow said revenue would fall between $3bn and $3.6bn, below the consensus of analysts surveyed by Thomson Reuters of $3.65bn.

Arrow chief executive William Mitchell, said: “We expect the marketplace to continue to be unsettled and that visibility will remain limited most likely through 2009. While we cannot control external forces, we will continue to manage our business with the discipline necessary to maintain our financial strength, which we see as a competitive advantage in these difficult times.”