Arrow Electronics formally announced Tuesday it will wind-down its business related to the disposition of personal computers and mobility assets.
The decision will allow the company to focus on next-generation technologies such as AI, industrial automation, smart cities and vehicles, said CEO Michael Long. The company has about 20,000 workers, but didn’t say how many workers will be affected by the wind-down.
The PC unit had been showing break-even results last year, but began declining in the first quarter of 2019, Long said on a conference call. “It was not sustainable over the long term.”
The company also said its second quarter results, to be formally announced Aug. 1, will be lower than initially expected due to lower demand for electronic components globally.
The company now expects to report second quarter sales of $7.3 billion with global component sales of about $5.25 billion. An earlier estimate put sales at about $7.6 billion. Arrow’s stock fell Monday on the news by more than 6%.
On the call, Long said the lowered sales estimates came after customers began “bracing for deteriorating economic conditions” and have reduced inventory and ordered fewer parts to preserve cash for the future.
“Since May 2, escalating trade wars have resulted in expanded tariffs and abandoned business with a large customer of components,” he said, likely referring to Huawei, which has been blacklisted by the U.S. Commerce Department for U.S. companies to sell to.
“Prolonged stress to free trade and cross border business are dampening effects to the components business,” he added. The Asia Pacific region “was the most worse off,” he said. “We fully expected growth there and it just didn’t happen. It was like a spigot got turned back.”
Long also said that it is too early to say when the components business might make an upward swing. “I don’t see anything is going to change between now and the end of the year as far as a slowdown in components,” he added.
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