The world's largest technology wholesaler, Ingram Micro (NYSE:IM), did a belly flop in the NYSE pool today. The stock, besides being among the day's most active, is leading all decliners with a 26% loss. That stings.

The culprit at first appears to be a decent first-quarter earnings report. Sales were up 15% and net income came in at almost four times last year's levels. Operating margins, while low, were the highest of any first quarter in five years. This hardly seems the kind of news that should give a stock the high-diving platform willies.

The rub is that while first-quarter earnings met analyst expectations, second-quarter guidance of $0.13 to $0.16 came in far below the $0.22 that analysts had hoped for. That's what sent investors fleeing the pool and caused one brokerage firm to lower its rating (thanks for nothing!).

For years, Ingram and industry No. 2 Tech Data (NASDAQ:TECD) have been trimming costs and struggling to revive sluggish sales to U.S. corporate customers. Unfortunately, in Ingram's case, two quarters of robust 33% revenue growth in Europe is about to give way to "a more moderate double-digit pace." Moderation is a no-no on Wall Street.

And there's no denying that at 1.1%, operating margins (operating income divided by sales) are razor thin, even if improved from a year ago. Investors might take solace that competitors Arrow Electronics (NYSE:ARW) and Synnex (NYSE:SNX) sport similar margins, but by comparison, Hewlett-Packard (NYSE:HPQ) delivers a more robust 6.2%.

Meanwhile, analysts will fine-tune their 2004 earnings estimates downward, but Ingram Micro still trades at somewhere around 10 times forward earnings. That sounds cheap by today's market standards. The company is focused on profitability, too (as it should be with such low operating margins).

Don't forget, however, that a low P/E can be a sign that the market sees trouble. Before wading out into the deep end with Ingram, you need to consider whether this particular distribution model can ever produce margins sufficient to support even a mid-double-digit P/E. If not, this one leaves you little margin for error -- literally.

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Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.