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Arrow Electronics (ARW - Analyst Report) posted an adjusted net income of $119.8 million or $1.05 per share in the first quarter of 2012 compared to $146.0 million or $1.24 per share in the previous year quarter and $157.3 million or $1.38 per share in the last quarter.

The results missed the Zacks Consensus Estimate of $1.07.

Revenues

Arrow reported sales of $4.89 billion, down 6.3% year over year and 10.1% sequentially, barely missing the Zacks Consensus Estimate of $4.91 billion.

On a segmental basis, Global component sales were $3.35 billion, down 13.9% year over year and 2.6% sequentially, facing enervations arising from the weakened European market which further deteriorated owing to slowing demands from the Chinese economy.

Revenues from Global enterprise computing solutions (ECS) came in at $1.54 billion, rising 14.9% year over year but down 23% sequentially. The annual rise was attributable to strength in sales from the American and European regions.

Margins

Gross margin came in at 13.9% versus 13.8% in the year-ago quarter and 13.7% in the previous quarter.

Operating margin came in at 3.8% compared to 4.2% in the previous year quarter and 4.5% in the previous quarter.

Balance Sheet and Cash Flows

Arrow ended the quarter with cash and cash equivalents of $739.7 million, up from $396.9 million at the end of the previous quarter. As of March 31, 2011, long-term debt was $2.25 billion, rising from $1.93 billion in the previous quarter.

During the quarter, the company generated $250.3 million of cash from operating activities and used $22.3 million for capital expenditure.

During the first quarter of 2012, Arrow repurchased 1.2 million shares for $50 million and the company currently has $100 million remaining in its current buyback program.

Guidance

Going forward, management expects sales in the second quarter of 2012 to come between $5.04 billion and $5.44 billion.

Global components sales are projected between $3.37 billion and $3.57 billion. Global enterprise computing solutions sales are estimated between $1.67 billion and $1.87 billion. Earnings per share (excluding any one-time charges) are projected around $1.08 to $1.20 per share.

The company currently retains a Zacks #2 Rank, which translates into a short-term ‘Buy’ rating. We also maintain a long-term ‘Neutral’ recommendation on the stock.

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