Why Avnet Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of electronic parts and computer products distributor Avnet (NYS: AVT) sank 10% today after its preliminary first-quarter results disappointed Wall Street.

So what: Avnet's shares have slumped in recent months on concerns over persistently weak IT spending, and today's profit warning naturally reinforces those fears. Management blamed the shortfall on particularly weak demand at its technology solutions segment, lower profit margins in the Western regions, and a larger-than-expected geographic-mix shift in its electronics marketing business, giving investors plenty of negative vibes over its growth going forward.

Now what: Management now expects first-quarter EPS of just $0.52-$0.58 on revenue of $5.85 billion, well below the average analyst estimate of $0.83 and $6.06 billion, respectively. "We remain steadfastly committed to monitoring market developments and taking actions consistent with the pursuit of our long-term operating goals," CEO Rick Hamada reassured investors. With the stock hitting a new 52-week low today and trading at a paltry forward P/E of around 5, contrarian Fools might even want to consider betting on that turnaround talk.

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The article Why Avnet Shares Plunged originally appeared on Fool.com.

Brian Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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