Avnet, Expecting Lower 4Q Earnings, Reports Layoff Plans

Avnet

The Phoenix-based distributor said weak sales of microprocessors and disk drives to PC makers will lead to earnings being about break-even for the quarter before charges. Thomson Financial/First Call had projected earnings of 3 cents per share.

Sales for the quarter ended June 28 will be down about $70 million, or 3 percent, from third-quarter revenue of $2.21 billion. Analysts expected revenue of $2.25 billion for the June quarter. Last year, Avnet reported fourth-quarter revenue of $2.54 billion.

"Other than weakness in the PC builder market, I am encouraged by the stability we are seeing in all other markets we serve," said Roy Vallee, Avnet chairman and CEO, in a statement. "However, since we cannot yet predict the timing of significant enterprisewide revenue growth, we have taken further actions to reduce costs by approximately $50 million per year through the elimination of approximately 775 additional jobs."

Avnet laid off 400 people last September, nearly 5 percent of its workforce.

The distributor will report charges of between $65 million and $85 million for the job severance costs, the write-down of assets acquired from its purchase of Kent Electronics, and investments in Internet-related businesses.

Shares of Avnet were trading at $19.48 Monday morning, down 64 cents, or 3 percent.