Al Senia (bio )

Wall Street Just Doesn't Respect the Channel

By Al Senia on February 15, 2008 5:04 PM

Distributor Ingram Micro proved a point last week for all channel companies: Even record profits can't deter a skeptical Wall Street financial community. The company reported a 24 percent increase in fourth quarter earnings, as quarterly sales leaped past $10 billion for the first time. However, even that didn't help the stock in the current bearish climate.

The company's first quarter financial outlook (around $9 billion in sales and 36 cents to 40 cents a share in earnings) fell slightly below Wall Street targets of $9.11 billion in sales and 44 cents a share in earnings. That led one stock analyst to cut his ratings on Ingram, hearing weakness in the North American and European markets could be worse than expected. And that led to downgrades of Tech Data and Synnex Corp.

Other channel companies like Cisco felt the same sting earlier this year. Current earnings were great. However, executives were cautious when looking forward. That was enough to tank Cisco stock.

Maybe the channel should follow Microsoft's example of being consistently cautious about both the present and the future, so there is only the potential of upside surprise when earnings are released. Clearly in the present climate Wall Street has little respect for channel stocks

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