Arrow To Cut Jobs As 2Q Income Plummets

Arrow Electronics Inc., the world's biggest distributor of electronic components, reported second-quarter results Tuesday that were better than expected, but still a major drop from the same period last year. Arrow also said it would cut 1,000 jobs in the third quarter. Combined with the 500 jobs cut earlier this year, the company will have reduced its workforce by about 14%.

For the quarter ended June 30, Arrow posted a net income of $7 million, or 7 cents per diluted share, down from income of $84 million, or 84 cents a share, in the second quarter of 2000. Sales were $2.5 billion, down from 3.2 billion in the same period last year.

Arrow had issued an earnings warning at the end of June, saying that profits would fall between break-even and 5 cents a share, thanks to reduced spending in a weak economy. "From that perspective, the results look relatively strong," says Robert Damron, an analyst with Tucker Anthony Capital Markets, "but these numbers are down significantly from last year and even significantly from last quarter."

Damron attributes Arrow's troubles to the slumping economy. "It really is a broad industry issue," he says. "The business environment is incredibly difficult. Technology spending has slowed dramatically, and there's an excess of supply." Damron says he expects the next quarter to remain slow for the company, but that business should slowly improve by the end of the year.