Component price collapse takes toll on Bell Micro

Q2 loss, cost-cutting underway

Lower than expected sales "in all geographies" has propelled Bell Microproducts into a second quarter loss.

In a preliminary report, the US-owned distie said it made an operating loss of $1.8m on sales of approximately$450 million. Sales were up 18 per cent on Q2 last year, but down 16 per cent on Q1's $534 million.

The company estimates that half of the sequential fall can be attributed to declining ASPs (average selling prices) in computer components - disk drives, semiconductors, peripherals etc. Prices of some volume
commodity products declined approximately 15 per cent during the quarter, the company says.

On the bright side, Bell Microproducts' higher margin storage solutions distribution operations continues to bring home the bacon, showing "relative strength" in the quarter. The upshot was an improvement in gross margins from 8.5 per cent in Q1 to 9.2 per cent in Q2, reflecting the different sales mix.

Bell Microproducts is taking an axe to its cost base. It plans job losses, warehouse consolidation in the US, and to scrap distribution contracts with 25 vendors, accounting for sub-one per cent of sales. The company has not announced what if any cost-cutting activities will take place at Ideal Hardware, its biggest European subsidiary. ®