Mixed Signals & Mad Money

Given the state of the global economy, it's not surprising there are mixed signals coming out of the electronics industry.

A few weeks ago, Arrow Electronics Inc. (NYSE: ARW), a $19 billion global distributor (for calendar 2010), reported that although its Book-to-Bill (BTB) ratio had dropped below 1 in late June, July orders were picking up.

Yesterday, during Avnet Inc. (NYSE: AVT)'s earnings conference call, the $26 billion distributor (for fiscal 2011) reported the same trend but hasn't seen its BTB bounce back. (A BTB over 1 indicates orders are outpacing actual sales (or "billings"); a BTB below 1 indicates orders are slowing down.)

Both company executives and market analysts admit they have no good explanation for the disparity.

Although they are two unique companies with distinctive business strategies, Arrow and Avnet are similar in a number of ways. Both represent the leading suppliers across the electronics components lineup in semiconductor; interconnect, passive, and electromechanical; and systems products. Both have a global footprint, spanning the Americas, EMEA, and Asia, and both serve hundreds of thousands of customers across a broad base of the electronics industry. Both companies have grown consistently through acquisition and organic efforts, and executives at both companies have a long and seasoned history in riding out market cycles.

“We can’t explain their Book-to-Bill disparity," said Harley Feldberg, president of Avnet's global Electronics Marketing business, in an email to EBN. "The market, including Avnet, saw a slowing in the later part of June, and from our perspective, those same conditions have continued into the first six weeks of this quarter. I wouldn’t categorize this as recessionary as much as a stabilizing of the market at a modestly reduced rate.”

The electronics industry is not alone in experiencing mixed messages -- NBC News last night said that wild swings in the stock market will continue to be "the new normal." Although global financial experts can point to the "back story" of the market, no one is forecasting the future. Barring any additional disasters -- covering everything from Japan's earthquake to government defaults -- distributors are expecting a "normal" seasonal slowdown for calendar Q3.

On a separate but related note, new Avnet CEO Rick Hamada was featured on CNBC's Mad Money with Jim Cramer, who had some favorable things to say about Avnet. Check out the interview at CNBC.