April 29, 2009 / 11:19 PM / 9 years ago

UPDATE 3-Flextronics results disappoint, forecast in line

* Q4 EPS ex-items 3 cents vs 4 cents view

* Q4 revenue $5.58 bln vs $6.05 bln view

* Sees Q1 EPS ex-items 4-8 cents, revenue $5-6 bln

* Shares flat after falling as much as 6 percent (Adds CEO and analyst comment, byline)

By Gabriel Madway

SAN FRANCISCO, April 29 (Reuters) - Contract electronics manufacturer Flextronics International Ltd (FLEX.O) reported weaker-than-expected quarterly results, as slack demand in its infrastructure and mobile segments pushed revenues down 28 percent.

But the Singapore-based company forecast current-quarter earnings in line with analysts’ estimates, and its shares erased initial losses of as much as 6 percent to trade flat with their Wednesday Nasdaq close of $3.89.

Flextronics, which was stung by a drop-off in demand for electronics brought on by the global economic slowdown, has been cutting costs and jobs to align its operations.

The company said all of its market segments showed weakness in the quarter. Although Chief Executive Mike McNamara said there were signs of stabilization, he added, “We do not see signs of a recovery and therefore we will be managing our business at the levels we have today.”

Sales in Flextronics’ infrastructure segment, its largest, fell 33 percent from last year. One of the company’s major customers, Nortel Networks NT.TO, filed for bankruptcy in January.

Revenue in the mobile segment fell 22 percent.

McNamara said Flextronics — whose customers include Cisco Systems Inc (CSCO.O), Hewlett-Packard (HPQ.N), Research in Motion RIM.TO and Sony Ericsson — will continue to focus on controlling costs, reducing inventory levels and improving its capital structure.

“The end demand environment really isn’t going to help them out over the next few quarters...The positive side is they’re seeing a bottom in orders, as are many of their peers,” Longbow Research analyst Shawn Harrison said. “It’s just that turn to the upside, that’s unknown.”

If demand does not pick up, the company will need to restructure again, he added.

Flextronics has managed to diversify its revenue stream and now supplies equipment to manufacturers of computers, medical equipment and cellphones, among others. Its top 10 customers now comprise 46 percent of sales, down from 63 percent two years ago.


Flextronics posted a wider net loss of $239.8 million, or 30 cents a share, for its fiscal fourth quarter ended March 31, compared with a loss of $92.8 million, or 11 cents a share, in the year-ago period.

Excluding items, Flextronics reported a profit of 3 cents a share, missing analysts’ average forecast of 4 cents a share according to Reuters Estimates.

Revenue fell 28 percent to $5.58 billion, short of the Wall Street estimate of $6.05 billion.

Computing segment sales fell 4 percent, and the company said it began to ramp up volume on HP notebooks last month.

The company forecast current-quarter earnings of 4 cents to 8 cents a share, on revenue of $5 billion to $6 billion. Wall Street was predicting earnings of 6 cents a share on revenue of $6.2 billion.

Flextronics said in March it would cut jobs and close facilities to cope with a weaker global economy. The company expects to save between $230 million and $260 million a year through a restructuring plan.

Shares of Flextronics fell as much as 6 percent after hours before trading at $3.90, barely changed from their Nasdaq close of $3.89. (Reporting by Gabriel Madway; Editing by Richard Chang, Leslie Gevirtz)

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