Wholesale distributor Ingram Micro yesterday announced that its third-quarter earnings will be lower than expected and that it is looking for a new chief executive officer.
Jerre Stead will step down as CEO when a successor is named. Stead, who has served as CEO and chairman since 1996, will remain chairman of Ingram's board, the company said.
The company didn't explain exactly why Stead will be stepping down. A spokeswoman said the board felt a new CEO was needed for the company to better manage its resources and handle changes in the industry.
Meanwhile, Ingram Micro blamed the expected third-quarter earnings shortfall on "difficult market conditions primarily in the United States".
For the quarter that will end on October 2, the company expects earnings to be between $US15 million and $21 million, or 10 cents to 14 cents per diluted share. For the same quarter a year ago, the company reported earnings of $60 million, or 40 cents per diluted share.
The company is likely to announce its third-quarter results on October 27.
"Competitive pricing, coupled with increased reductions in vendor rebates and incentives, have placed additional pressure on the company's gross margins, especially in the United States," Stead said in a statement. In addition, efforts to raise prices in select market segments prompted customers to go to other sources for IT purchases, the company said.
Net sales for the third quarter are expected to increase about 15 per cent compared to the same period last year, while gross margins are expected to decline between 130 and 150 percentage points below the same quarter a year ago, the company said.
Ingram Micro's reorganisation announced in March has given the company a competitive cost structure, but implementing the changes "during a time of major industry transformation resulted in the company being less focused on its short-term execution and unable to respond quickly to important industry changes", the statement said.
The reorganisation included the closure of the company's California consolidation centre and cutting about 1400 jobs.
Before yesterday's announcement, 13 analysts polled by First Call predicted the company would announce third-quarter earnings of 41 cents per share.
Ingram Micro's stock dropped $5.94 to $13.34 on the New York Stock Exchange yesterday.