Brightpoint's earnings surge on smartphone sales

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Brightpoint Inc., a distributor of wireless phones, said Thursday that its earnings increased more than sixfold as the growing demand for smartphones meant that more higher-priced devices passed through Brightpoint's facilities.

Brightpoint's business is mainly reselling wireless phones. About 90 percent of the company's revenue has typically come from its distribution business, and Brightpoint has said in regulatory filings that it has 25,000 "business-to-business" customers worldwide, which refer to companies that sell to other companies, instead of directly to consumers.

The company said it handled more than 27 million wireless devices in the first quarter, versus 22.5 million a year ago.

The Indianapolis-based company reported after the market closed that its first-quarter net income was $9.3 million, or 13 cents per share, versus $1.4 million, or 2 cents per share, a year ago.

Excluding one-time expenses, the company would have earned 20 cents per share. Revenue rose 40 percent, to $1.1 billion, from $795.2 million a year ago.

The results topped the average estimates of analysts, who expected adjusted earnings of 19 cents per share on revenue of $982.1 million, according to FactSet.

Brightpoint shares surged Friday morning to as high as $11.20 each before settling back to $10.51 at midday, up 2.3 percent. 

For the full year, the company expects to handle between 111 million and 114 million wireless devices, an increase of up to 15 percent compared to 2010. It has forecast earnings of 90 cents per share to $1.05 per share, excluding items. Analysts are expecting $1 per share, on that basis.

Brightpoint saw its shares downgraded in March on the news that AT&T would acquire T-Mobile, which is one of the company's major logistics customers. Logistics accounts for about 10 percent of Brightpoint's revenue, but it's a high-margin business.

At least one analyst shrugged off the looming threat. Oppenheimer funds responded to Brightpoint's quarterly earnings announcement Friday by maintaining its "outperform" rating. The analysts acknowledged that lower margins and the impact of the AT&T acquisition of T-mobile could "cap" share price in the near term.

"However, longer term we see multiple drivers supporting growth," the analysts concluded in a research note issued Friday. Those trends include consumers buying higher-priced smartphones, momentum in Europe and Brightpoint's earlier acquisition of Touchstone, which handles used devices.


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