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Distributors not so bullish - Business & Finance Electronic News,.
Distributors not so bullish - Business
& Finance Electronic News, May 27, 2002 by Heidi Elliott.
While semiconductor companies expressed optimism about a real
industry turn-around, their reseller partners are more cautious.Distribution
executives and analysts believe the worst is over -- but they're
not ready to declare out-and-out victory over the downturn.
"I do feel we've bottomed out ... but it's not time to
be popping champagne," said Memec CEO David Ashworth. |
With predominantly gloomy first quarter financials across the
supply chain, many executives reported positive signs -- including
increasing orders and bookings; plus higher backlog levels and
some stabilization of average selling prices. Several suppliers
expect sequential gains for the second quarter. And while semiconductor
executives are more boisterous about the economy, distributors
are not experiencing the same level of excitement.Rightly so.
"If you peel back the onion, it makes sense," said
distribution analyst Robert Damron, senior VP and equity analyst
at SWS Securities in Milwaukee. He noted that specific markets
-- consumer, automotive, military -- are relatively strong;
and those end markets are serviced directly by semiconductor
and other component suppliers. Meanwhile, still sluggish markets,
including telecommunications, data communications and OEMs,
are traditionally served by distribution.
"Distributors do not play in that marketplace ... and they
do not benefit from the strong performance there," Damron
added."We're bumping along the bottom...
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