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Lower-Margin Products Impact Ingram Micro Earnings

April 26, 2013 - News

Technology distributor Ingram Micro Inc. this week reported higher sales but lower net income.

Worldwide sales totaled $10.26 billion, up from $8.64 billion in the first quarter of 2012, while net income fell to $49.8 million from $90 million. The fourth-quarter 2012 acquisitions of Brightpoint Inc. and Aptec Holdings Ltd. added $1.1 billion and $75 million to first-quarter revenue.

Ingram Micro said sales were impacted by lower-margin products, such as tablets, and a competitive selling environment in Europe and North America. Still, the company said North America saw sales growth of 7 percent.

"High growth in tablets and other mobile devices continues to affect gross margins," said Alain Monie, president and CEO of Ingram Micro Inc., in a press release. "However, this high-growth product opportunity also brings the addition of a new set of vendors and customers to the Ingram Micro ecosystem, which enables us to tap into the associated supply chain services to large OEMs and service providers.  These services carry better margins and lower working capital metrics. We recognized this opportunity early last year, leading us to acquire BrightPoint, our new mobility business, which has already been nicely accretive to gross margin and earnings."

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