Avnet EM projects stronger quarter-to-date results

Phoenix, Ariz. — Avnet Inc. announced at a recent analyst conference that stronger than expected quarter-to-date results will boost revenue at its Electronics Marketing (EM) Group in the range of $2.375 billion to $2.475 billion as compared with the prior range of $2.15 billion to $2.45 billion.

This translates into consolidated sales for Avnet of between $4.325 billion and $4.725 billion, up from a previous estimation of $4.10 billion to $4.70 billion, and earnings in the range of $0.56 to $0.62 per share.

Avnet expects the Technology Solutions Group to be within the previously provided range of $1.95 billion to $2.25 billion, although Avnet noted that billings in the month of December, which can account for more than 50 percent of the quarter’s revenue, will be an important factor in determining the actual results for the quarter.

Although Avnet has revised its 2009 forecast for components from -4 percent to -19 percent, the distributor expects a return to growth in 2010. The distributor is projecting EM sales growth of 9 percent in 2010, followed by two more years of positive growth in the 9 to 11 percent range.


On a global basis, markets appear to have bottomed around the June quarter, according to Roy Vallee, chairman and CEO for Avnet Inc.

Vallee says key growth drivers will include new and expanded product lines for LEDs, batteries, networking and virtualization; expansion into new and higher growth markets such as China, India, Turkey and Vietnam, and service offerings including Avnet’s new Express, SolutionsPath and Logistics services.

The global distributor also continues to add value through mergers and acquisitions including the recent purchases of Abacus, NDI, Vanda Group and Sunshine.

Harvey Feldberg, president of Avnet Electronics Marketing, says it was a tough year, but unit growth started to return in March 2009, followed by a pricing recovery in August, with Asia leading demand growth.

Feldberg says inventories are falling more slowly, and he sees a much better inventory alignment around supply and demand compared to a year ago. However, lead times are extending and there are quite a few shortages overall across the industry, he says.

However, Feldberg says there are no signs that customers are double ordering or buffering inventories. Pricing power is improving and more suppliers are pushing back in negotiations, he says.

Moving ahead, Feldberg says Avnet will focus on three critical areas to grow. These include targeted services in the areas of supply chain services, design services and embedded solutions; distinct regional business models to meet each region’s requirements and infrastructure, as well as investment and leading-edge global value propositions across the design chain, supply chain and e-commerce services.

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