SoftBank sale keeps Ingram Micro in black

Proceeds from the sale of SoftBank stock kept Ingram Micro in the black last quarter after excess inventory, doubtful accounts and changes in vendor-sponsored programmes left the embattled distributor facing a $45.9m (£28.7m) loss.

Proceeds from the sale of SoftBank stock kept Ingram Micro in the black last quarter after excess inventory, doubtful accounts and changes in vendor-sponsored programmes left the embattled distributor facing a $45.9m (£28.7m) loss.

Ingram posted profit of $75m for the fourth quarter ended 1 January after a $125m gain from the sale of 35 per cent of its stake in SoftBank. Q4 profit last year was $73.2m.

Turnover for the quarter was up 26 per cent from $6.2bn to $7.8bn. Turnover in the US increased 18 per cent to $4.4bn, while sales in Europe jumped 19 per cent to $2.36bn.

Ingram's other regions turned in a whopping 108 per cent rise in turnover to $1.2bn.

Jerre Stead, Ingram Micro's chief executive, said demand in 1999 was solid, but changes in vendor terms and conditions and incentive programmes, as well as rapid changes in technology, had forced the company to budget $102m for excess and slow-moving inventory in Q4.

He said Ingram would increase its prices to fund the cost of changes to vendor-sponsored programmes.

But Stephen Gill, chief financial officer for Europe, said a price increase would not be formally introduced and would not make Ingram more expensive than its competitors.

He said it was merely reviewing which of is vendor terms and conditions to pass on and what its services were worth.

Stead said the number of doubtful accounts peaked in Q4 at $41m. He said profit for the year was $200m, down from $486.61m for 1998. Turnover for the year was $28bn, up from $22bn for 1999.

Despite the decline in its profitability, Stead said Ingram was entering 2000 "from a position of financial strength".

"There is broad recognition of the importance of high-volume, accurate and timely distribution services as proven by the challenges facing many industries, particularly in Internet fulfilment in the fourth quarter of 1999," he said.

He added that improving profitability was a priority for the company.

Stead predicated that profit for Q1 2000 would range from $88m and $94m. This includes a $69m gain on the sale of SoftBank stock last month.