Arrow Electronics Straight Across

New York-based Arrow Electronics, Inc. (ARW - Analyst Report) is one of the world s largest distributors of electronic components and computing products. The company sources products from about 800 suppliers and distributes them to over 130,000 customers (original equipment manufacturers, contract manufactures and commercial customers).

Arrow reported revenues of $4.09 billion in Q4:08, down 7.5% y/y and down 4.9% q/q. On a pro forma basis (including the impact of acquisition of LOGIX S. A.), sales were down 12% y/y. Gross margin came in at 12.7%, down from 13.9% generated a year ago and down from 13.1% recorded in the prior-year period, primarily due to an increase in the mix of business from Asia and ECS, as well as weakness in North American and European components.

Operating margin came in at 3.1%, down from 4.6% generated a year ago. GAAP EPS was $0.36. Non-GAAP EPS was $0.60. For full year 2008, ARW reported sales of $16.76 billion, up from $15.98 billion in 2007. GAAP EPS was $2.48 while non-GAAP EPS was $2.93.

Going forward, management expects sales between $3.0 and $3.6 billion in Q1:09. EPS on a diluted basis is estimated between $0.32 and $0.44. We are maintaining our Hold rating on ARW shares with a target price of $19.