Technology distributor Ingram Micro has said that it could stand to lose up to $10m due to low technology demand from US companies and a softening in its international markets.
Ingram now expects to beak-even at best by filing revenues of $5.8bn to $6bn for the second quarter ending 30 June. First Call, the earnings tracking company, had predicted it would be more around the $6.2bn mark.
Even though the sales slump is severe, the demand for computer equipment has returned to a stabilised level in current weeks.
Ingram's chairman and chief executive, Kent B Foster, said that until fairly recently the slowdown in demand had been limited to the US market.
He said: "We've been seeing about the same level of sales for about the past six weeks in the US. Things could change tomorrow, but that's a decent period of time to have roughly the same amount of sales."
Ingram expected a second-quarter profit of nine cents per share, but its price fell on Wednesday by 11 cents. This announcement was made after US markets closed. The stock has risen by 25 per cent this year.
The warning has come a week after Ingram announced its bid to cut costs, which included 1000 staff layoffs out of a 16,000-strong workforce. The company expects to save $30m-40m by cutting down staff.
In addition, the company has announced plans to close a distribution centre in Newark, and also facilities that process returned items situated in Santa Ana and Rancho Cucamonga. There will be a new facility to process returned items based in Harrisburg.
Foster joined Ingram last year in the hope of raising product prices in order to challenge the competition that damaged Ingram's profitability and put several rivals out of business.
He said: "Last year, we were clearly focused on improving our gross margin. The same intensity that was directed at gross margin is now being directed at operating expenses."
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