QUOTE AND NEWS
Benzinga  Dec 2  Comment 
  Ingram Micro Inc. (NYSE: IM) surged 3.5 percent to $38.88. The volume of Ingram Micro shares traded was 2944 percent higher than normal. Imgram Micro disclosed that Tianjin Tianhai's takeover of the company has been approved by China's...
Reuters  Nov 10  Comment 
* Ingram Micro Inc - end date by which acquisition of Ingram Micro by Tianjin Tianhai must be completed has been extended to Dec 15, 2016
newratings.com  Nov 3  Comment 
3 November 2016 Tern Plc (AIM: TERN) Sale of Concerto Tern Plc ("Tern" or the "Company"), the investment company specialising in the cloud ...
Reuters  Nov 2  Comment 
* Says it gets U.S. CFIUS approval for its unit gcl acquisition to buy Ingram Micro
Benzinga  Nov 1  Comment 
  Fidelity Southern Corporation (NASDAQ: LION) surged 6.8 percent to $19.47. The volume of Fidelity Southern shares traded was 1233 percent higher than normal. Fidelity Southern will replace Monster Worldwide Inc. (NYSE: MWW) in the S&P...
Forbes  Nov 1  Comment 
In recent trading, shares of Ingram Micro Inc. (NYSE: IM) have crossed above the average analyst 12-month target price of $36.63, changing hands for $37.20/share. When a stock reaches the target an analyst has set, the analyst logically has two...
Reuters  Nov 1  Comment 
* Ingram micro inc - received clearance from antitrust authorities in austria, italy, poland and slovakia




 
TOP CONTRIBUTORS

Ingram Micro Inc. (NYSE:IM) is the world's largest wholesale distributor of computer hardware and software by net revenue. The company is a middle man between computer hardware / software companies and retail stores, which cater to the end-user. The business of transporting and distributing high tech electronic goods is extremely competitive. Distributors, such as Ingram, have no way to differentiate their products except through price.

The company's focus makes it vulnerable to slowdowns in PC sales. For instance, in 2002 when demand for computers dropped, Ingram lost $275 million.[1] Given the weak economic climate in 2009, the domestic spending mood has had a significant impact on demand for computer products - which in turn impacts demand for IM's distribution services. As a result, total revenues for Ingram Micro have declined from $34.4 billion in 2008 to $29.5 billion in 2009.

Ingram Micro is the only major electronics distributor to have significant operations in Asia. The personal computer market in Asia has been growing much more rapidly than in the United States recently.[2] As a result, Ingram Micro may be better positioned to capture this increase in demand.

Business Overview

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Ingram Micro:Financial Summary[3]

Ingram Micro is the world's largest wholesale distributor of computer hardware, software, networking equipment and peripherals (such as scanners and cameras) in terms of net revenues. The company does not manufacture any product, neither does it sell directly to the end-user; rather, it acts as a link between original equipment manufacturers, such as Hewlett-Packard and Microsoft, and resellers, who sell to the end-user. Ingram makes money by selling the products at a mark-up.

Ingram has short-term distribution agreements with the manufacturers which generally impose territorial restrictions, provide the company with non-exclusive distribution rights and outline the terms of discount and return rights.[4] As a result, its operating margin, and hence net income, is primarily dependent on the terms of these agreements.

The electronic distribution industry is characterized by extreme competition. Distributors, such as Ingram, have no way to differentiate their offerings except through price. This is because they do not hold exclusive rights for any original equipment manufacturer, and the manufacturers themselves compete vigorously with each other. Even though Ingram is unmatched in terms of its reach, they still have to compete with smaller companies in different regions and other channels of distribution, such as direct sales by manufacturers. The risk of disintermediation also leaves Ingram with a poor bargaining position. As a result of these factors, margins in the industry are very thin.

Business Financials

Ingram Micro had net sales of $$29.5 billion in 2009, earning a net income of $202 million in 2009. This represents a turnaround from their net loss of of $394 million in 2008.

Geographical Distribution

The company serves over 170,000 customers in 150 countries. North America represents their largest market with nearly $14 billion(40%) of revenue in 2007 and Asia accounted for $7.1 billion (20%) of revenue in 2007. [5]

The global market for personal computers increased by 16% in the second quarter of 2008, compared to the year before -- the market in Asia grew by 18%, while the U.S. market increased by 4.5%.[6] Ingram believes that its presence in Asia provides it an advantage over its main competitors, namely Tech Data and Synnex, who are focused on the North American and European market.[7]

Trends and Forces

Distribution agreements are short term and provide little competitive advantage

Ingram has the advantage of having a very extensive distribution network; it distributes products from 1400 manufacturers to 170,000 resellers and is one of the the largest wholesale distributor of computer-related products in the world in terms of revenue. However, the company does not hold any exclusive distribution rights for any original equipment manufacturer and most of its agreements are short-term.[8] Thus, distributors need to be extremely efficient in order to deliver the lowest prices to the end-user. While there is no distributor who can compete with Ingram in terms of reach, the company faces competition from many regional players, as well as from the manufacturer's themselves who often sells to customers directly. As a result, Ingram's margins are extremely thin. On the positive side, since cost of sales were almost 95% of revenues, any improvement in discount terms will automatically translate into higher net income for the company.

Latin America and Asia offers growth opportunities for Ingram Micro

The Latin American and Asian personal computer market has grown significantly since 2007.[9] Combined with the slowing growth in the U.S. during the same period, Ingram Micro's international reach may prove to be a major driver of future growth.[10] Additionally, while Ingram faces competition from smaller regional players, its two major competitors, Tech Data and Synnex, does not have any significant operation in either Latin America or Asia.

Competition

Ingram faces direct competition from other wholesale distributors in all of its regions. In addition, it also faces competition from other sales channels, including direct sales by original equipment manufacturers and internet sellers, such as Dell and Buy.com. However, in the wholesale distribution market for electronic products, only Synnex and Tech Data can compete with Ingram in terms of volume and reach -- though neither of them have significant operations in Asia or Latin America, the two fastest growing region for computer-related products. Agreement terms with suppliers and ability to favorably price products are the key factors that drive net income for the players in the industry.

References

  1. Ingram Micro 2002 Annual Report, Page 2
  2. Gartner Says Worldwide PC Market Grew 16 Percent in Second Quarter of 2008, Retrieved 7/24/2008
  3. IM 2007 10-K, Note 10: Segment Information, Page 65
  4. IM 2007 10-K, Item 6: Selected Financial Data, Page 7
  5. IM 2007 10-K, Note 10: Segment Information, Page 63
  6. Gartner Says Worldwide PC Market Grew 16 Percent in Second Quarter of 2008, Retrieved 7/24/2008
  7. IM 2007 10-K, Note 1: Business, Page 2
  8. IM 2007 10-K, Item 1: Business, Page 6
  9. Gartner Says Worldwide PC Market Grew 16 Percent in Second Quarter of 2008, Retrieved 7/24/2008
  10. Gartner Says Worldwide PC Market Grew 16 Percent in Second Quarter of 2008, Retrieved 7/24/2008
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