After giving effect to the previously-announced special charges of $9.4 million ($5.7 million after taxes) associated with the acquisition and integration of Wyle Electronics and the dilutive effect of the convertible debt, reported net income in the first quarter was $71.7 million or $.68 per share on a diluted basis.
Early in the first quarter, we experienced a slowdown in our components business, primarily limited to our large telecom and networking customers in North America and the contract manufacturers that service them, said Francis M. Scricco, President and Chief Executive Officer of Arrow. Late in the quarter, weakening economic conditions generally produced a more widespread slowdown affecting a broader segment of our North American customer base. Our operations in the Asia/Pacific region experienced a similar weakening during the quarter. In Europe, however, our businesses continued to perform well.
At this point, we, like so many others, do not have enough visibility to give explicit sales and earnings guidance for the second quarter or for the year, added Mr. Scricco. I can say, however, that the weakness we saw at the end of the first quarter is continuing. At current run rates, second quarter unit volumes will be below first quarter levels, and, given our industry’s well documented supply imbalances, gross margin erosion can be expected.
Arrow Electronics is the world’s largest distributor of electronic components and computer products, with 2000 sales of $13 billion. Headquartered in Melville, New York, Arrow serves as a supply channel partner for more than 600 suppliers and 200,000 original equipment manufacturers, contract manufacturers, and commercial customers through more than 225 sales facilities and 23 distribution centers in 39 countries.
