Financial Results and Brightpoint and Public Companies and Share prices and Distribution & Logistics

BlackBerry woes hamper sales for BrightPoint, analysts say

October 28, 2013

Ongoing issues with major customer BlackBerry helped push BrightPoint’s sales roughly $250 million below Wall Street estimates in the third quarter, analysts say.

Ingram Micro Inc., which acquired BrightPoint in October 2012 for $840 million, last week reported $1.1 billion in quarterly revenue for Indianapolis-based BrightPoint, which provides logistics and distribution services to the mobile device industry.

The results disappointed Wall Street analysts, which had projected around $1.3 billion for the BrightPoint division during the quarter. The results also represented a significant dip from revenue of $1.3 billion in the second quarter.

“While the revenue performance in the BrightPoint segment was a surprise, we believe the issues are temporary and can improve,” Barclays Research analysts summarized in a note to investors on Friday.

Santa Ana, Calif.-based Ingram does not report profit for BrightPoint, which now operates as Ingram Micro Mobility.

Analysts pinpointed Blackberry and its own woes as major contributors to the BrightPoint sales slump. The fortunes of BlackBerry—a major customer—are somewhat intertwined with those of BrightPoint.

The mobile device maker reported in September that it lost $965 million in its last quarter after sales plunged 45 percent from the same quarter a year earlier.

During an after-market conference call on Thursday, analysts repeatedly asked Ingram Micro’s executives about BlackBerry’s impact on BrightPoint, which accounted for about 10 percent of Ingram’s $10.2 billion in sales in the third quarter.

William Humes, Ingram’s chief financial officer and chief operating officer, quickly noted that BlackBerry is not BrightPoint's biggest customer. The “lion’s share” of sales, he said, belongs to Samsung, which reported a $7.06 billion profit in its third quarter.

Humes and CEO Alain Monie referred to a manufacturer that caused a hit to sales, especially in Asia, but they did not reveal who it was. Analysts believe that company was BlackBerry.

Ingram’s overall profit surged to $78.9 million, or 50 cents per share, from $53.3 million, or 35 cents per share, in the third quarter of 2012. During trading on Monday morning, shares of Ingram Micro were down 2.7 percent since the firm reported its third-quarter results last week.

Ingram Micro's revenue missed the target, according to Raymond James analysts, but “we note that the company is clearly making a conscious decision to trade revenue for profitability, which we see as better than the alternative.”

BrightPoint employed more than 1,000 workers in central Indiana before Ingram bought it.

Ingram said in 2012 that the deal would save $55 million via “cost synergies and efficiencies” by 2014. After the acquisition, BrightPoint moved its administrative offices in Indianapolis into a distribution facility it operates in Plainfield. The company has remained silent on its local headcount.

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