The computer business has been good to Arrow Electronics Inc. Sales of computer products grew 33 percent in the first quarter of 2007 and hoisted the distributor's overall sales and profits to record levels for the period that ended in March.
Arrow (Melville, N.Y.) today reported first-quarter net income was $96.3 million on total sales of $3.5 billion. That compared with net income of $81.6 million on total sales of $3.19 billion in the same quarter of 2006.
Adjusting for certain charges, credits and losses related to Arrow's "efficiency enhancement" initiatives, acquisitions, and prepayment of debt, first-quarter 2007 net income would have been $91.8 million.
Computer products sales for the quarter were $776 million, a 33 percent increase from the first quarter of 2006. Arrow said the growth was largely driven by double-digit increases in sales of industry standard servers, storage, software and services, which outpaced overall market growth in those segments.
Additionally, sales for the enterprise computing solutions business increased 12 percent on a pro forma basis including the impact of Arrow's acquisitions of Alternative Technology, Inc. and the storage and security distribution business of InTechnology plc.
Component sales increased 4 percent year-over-year to $2.72 billion. Arrow reported "exceptional" results in Europe, achieving record sales and the highest first-quarter operating income since 2001, attributed to a focus on sales and marketing initiatives, and an expanded local presence.
While Arrow saw its core business with small and medium-sized customers increase in double digits, the growth was offset by weakness in the large EMS segment in North America and Asia Pacific. Despite this, the North American business posted the second-highest first-quarter operating income since 2001, and operating income in Asia Pacific grew more than 70 percent year-over-year, Arrow said.
Arrow said its second quarter results should exhibit "normal seasonality," along with the affects of continued weakness in the large EMS segment. Total second-quarter sales are projected to be between $3.85 billion and $4.15 billion, with worldwide component sales representing roughly 70 percent and computer sales about 30 percent. Diluted earnings per share, excluding any charges, are expected to be in the range of 78 cents to 84 cents, an increase of 1 percent to 9 percent from last year's second quarter.