April 29, 2008 / 11:19 PM / 10 years ago

UPDATE 2-Flextronics earnings beat estimates; shares rise

(Adds analyst’s comment)

By Philipp Gollner

SAN FRANCISCO, April 29 (Reuters) - Contract electronics manufacturer Flextronics International Ltd (FLEX.O) posted a fourth-quarter loss on Tuesday on acquisition charges, but results beat estimates and its shares rose 3.8 percent in after-hours trading.

Flextronics was helped by a faster-than-expected integration of former competitor Solectron Corp, which Flextronics bought for $3.6 billion last year, Chief Financial Officer Thomas Smach said in an interview.

Weakness in U.S. demand seen by some Flextronics customers was offset by strong sales in other regions and new product lines, he said.

“While the U.S. might be headed for or in a recession — probably in a recession — we’re exposed to multiple customers, multiple products and geographies,” Smach said. “That diversification really allows us to outperform the markets in the U.S.”

The net loss in Flextronics’ fiscal fourth quarter ended March 31 was $92.8 million, or 11 cents per share, compared with year-earlier net income of $120.7 million, or 20 cents per share. Revenue rose to $7.78 billion from $4.68 billion.

Excluding restructuring charges and other costs from the Solectron acquisition, earnings were 26 cents per share, ahead of the average analysts’ estimate of 23 cents per share as compiled by Reuters Estimates.

“The results were really good. You could even say excellent,” said Louis Miscioscia, an analyst with Cowen and Co who has an “outperform” rating on Flextronics. “They said they were seeing some weakness with their customers, but their own business was doing well.”

Revenue matched the average analysts’ projection of $7.78 billion. Flextronics in January said it expected fourth-quarter revenue of $7.5 billion to $7.9 billion and earnings before items of 22 cents to 24 cents per share.

Flextronics, based in Singapore, forecast fiscal first-quarter earnings before certain costs ranging from 27 cents per share to 29 cents per share, and revenue of $8 billion to $8.5 billion.

The average analysts’ projection calls for first-quarter earnings per share before items of 27 cents and revenue of $8.33 billion.

Flextronics, whose largest competitors include Jabil Circuit Inc (JBL.N) and Celestica Inc (CLS.TO), makes mobile phones for Sony-Ericsson as well as printers and server computers for Hewlett-Packard Co (HPQ.N), among other customers.

Shares of Flextronics, down 14 percent this year, added 39 cents after the earnings report after closing up 2 percent at $10.36 on Nasdaq. (Reporting by Philipp Gollner, Editing Carol Bishopric, Toni Reinhold)

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