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Avnet Slides on Weak Guidance

The company cites the timing of order flow related to the Memec deal.
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(AVT) - Get Avnet, Inc. Report

fell 8% after the tech component supplier guided toward weaker-than-expected first-quarter earnings.

The Phoenix company posted fourth-quarter numbers that met Wall Street's expectations. For the quarter ended July 2, Avnet made $47.3 million, or 39 cents a share, down from the year-ago $48.7 million, or 40 cents a share. Sales rose to $2.83 billion from $2.64 billion a year earlier. Wall Street analysts had been expecting a 36-cent profit on sales of $2.81 billion.

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"We are pleased with how we performed during fiscal year 2005, given that the start of this fiscal year coincided with the beginning of an electronics components mid-cycle inventory correction," CEO Roy Vallee said. "Our focus on value-based management allowed Electronics Marketing to react quickly to the market conditions and weather this short cycle with improved financial performance. Electronics Marketing's solid performance coupled with another record year for Technology Solutions allowed us to achieve the best performance in three years in revenue, operating income and return on capital, and we closed out the quarter with record working capital velocity metrics."

But the company guided toward a disappointing first-quarter bottom line, saying it expects to make 30 to 35 cents a share for the period ending in October on revenue of around $3.25 billion. Avnet said sales at its electronics marketing unit would post sales of around $2.13 billion, a figure that was reduced by about $40 million "due to a couple of factors related to the Memec acquisition," Avnet said.

The company said that because of the timing of closing of the acquisition, one day of Memec shipments in July was included in Memec's preclose results of operations and are therefore excluded from Avnet's first quarter. More important, because of the merging of certain warehouse operations immediately after the close, it was necessary to expedite certain shipments originally scheduled for early July into June in order to ensure meeting commitments to customers.

On Wednesday, Avnet fell $2.02 to $24.10.