Tech Data cuts guidance

Computer 2000 parent company expects much lower than expected profits

Distribution giant Tech Data has blamed “challenges in Europe” as the reason for cutting its earning expectations for its second fiscal quarter 2006, almost by half.

The firm, which is parent company of Computer 2000 (C2000) in the UK, said today that it expects Q2 turnover to be in the range of between $4.8bn and $4.82bn, compared to $4.6bn in Q2 2005. However, despite this upturn in sales the distributor said it expects profit to be between $12.5m and $16.5m. Tech Data had previously stated that it expected profits for this quarter to be between $24m and $27m. The firm said in its earning statement that the decline was primarily attributed to a lower-than-expected gross margin, mainly in EMEA.

“While our Americas region continues to perform well, challenges in our European operations have impacted our overall earning expectations for this quarter,” said Steve Raymund, chief executive of Tech Data. “Apart from the performance in Europe, we are pleased that net sales will approach the high end of our expectations,” he added.