Arrow Electronics announced that will eliminate 400 jobs, or about 3 percent of the company's global work force, and will roll its global information business into its components unit.

About $25 million in annual operating expense savings are expected, with the majority of that coming in Q3. The Melville, N.Y.-based company said it will record restructuring charges  between $12 million and $15 million in connection with these actions and expects that about half of the charges will be included in its Q2 results.

"It is unfortunate that our decisions require the elimination of employee positions, but we must continue to identify opportunities to operate more efficiently and, at the same time, enhance our ability to meet the needs of our customers and suppliers," said William E. Mitchell, Arrow's president and CEO, in a statement. "This is an evolutionary process that is critical to the success of Arrow and those who depend on us."

Included in the actions being taken today will be the merger of the global information business (GIB) into Arrow's existing global components businesses and the reduction of certain GIB offerings. "The information and services developed by GIB have proven to be of benefit to both our customers and to Arrow," Mitchell said, "but today the market served by GIB is not large enough to economically support this business as a separate entity."

"Of the 400 headcount reduction, 40 are from folding the standalone global information biz into the global component biz, 60 from rationalizing NACP logistics centers (closing Memphis facility), and the remaining 300 from the NA component biz -- mainly support staff," said Jon Horvath, an analyst with the Lehman Brothers, in a report. "We are encouraged by Arrow’s decision to further right size their business, but also believe this is an indication that the strength seen in Arrow’s component biz in Q1 has not continued and that this may not be the last reduction."

By: DocMemory
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