October 26, 2009 / 8:27 PM / 8 years ago

UPDATE 3-Flextronics results top Street's view, shares up

* Q2 EPS ex-items 13 cents vs Street view 9 cents

* Q2 revenue $5.83 bln vs Street view $5.77 bln

* Sees Q3 EPS ex-items 14-16 cts, rev $6-6.4 bln

* Shares up 3.4 pct (Adds details from call, share movement, byline)

By Gabriel Madway

SAN FRANCISCO, Oct 26 (Reuters) - Contract electronics manufacturer Flextronics International Ltd (FLEX.O) reported better-than-expected results on cost cuts and a steadily improving economy, and its comments about stronger demand next year helped boost its shares more than 3 percent after hours.

Flextronics on Monday forecast a current-quarter profit that was just ahead of Wall Street’s target, and sales in line with expectations.

It also estimated that downward sales pressure in the seasonally weak March quarter would be “substantially” less than in the past, which analysts took as a clear expectation of improving end demand.

Flextronics’ shares erased early losses in extended trading and rose 3 percent after the forecast.

“It looks like revenue going into what is seasonally a weaker quarter for March is going to be better as they ramp new programs,” said Longbow Research analyst Shawn Harrison.

He said Flextronics’ infrastructure segment, its largest, seems to be rebounding while its computing segment continues to grow following new business wins from Hewlett-Packard Co (HPQ.N) and Dell Inc DELL.O.

Electronic manufacturing service providers such as Flextronics were widely expected to post results ahead of analysts’ targets in the September quarter, following extensive cost-cutting earlier in the year and a swell in demand for technology products heading into 2010.

“We are seeing signs of strengthening in the economy and a general improvement in business conditions,” Chief Executive Mike McNamara said on a conference call with analysts.

ON TRACK FOR SAVINGS

Flextronics said it remains on track to achieve annual savings of $230 million to $260 million by the end of fiscal 2010.

Flextronics -- which manufactures products for technology heavyweights such as International Business Machines Corp (IBM.N), Cisco Systems Inc (CSCO.O) and BlackBerry maker Research in Motion Ltd RIM.TO -- posted net income in the fiscal second quarter ended Oct. 2 of $19.7 million, or 2 cents a share.

Based on previously reported data, in the year-ago period Flextronics posted a profit of $38.5 million, or 5 cents a share.

Excluding items, Flextronics earned 13 cents a share in its most recent quarter, ahead of analysts’ average estimate of 9 cents a share, according to Thomson Reuters I/B/E/S.

Revenue fell 34 percent, based on previously reported data, to $5.83 billion, better than the Wall Street target of $5.77 billion.

Flextronics forecast current-quarter earnings of 14 cents to 16 cents a share on revenue of $6 billion to $6.4 billion.

Analysts are expecting earnings of 13 cents a share on revenue of $6.24 billion.

Shares of Singapore-based Flextronics closed at $7.11 on Nasdaq and rose to $7.35 in extended trading. (Reporting by Gabriel Madway; Editing by Richard Chang)

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