SANM ( $18.50)meets lowered Q3 estimates
(UPDATE: adds details, byline. Previous San Jose)
By Ben Berkowitz
LOS ANGELES, July 18 (Reuters) - Contract electronics manufacturer Sanmina Corp. (NasdaqNM:SANM - news) said on Wednesday that fiscal third-quarter earnings before special items fell sharply from a year ago, in line with lowered guidance, and that it will take a restructuring charge in the fourth quarter related to the reduction of fabrication capacity in North America.
The San Jose, California-based manufacturer also gave guidance for the fiscal fourth quarter, projecting essentially flat revenues compared with the third quarter, and earnings per share in the range of 8 cents to 10 cents.
``Given the uncertainty of our markets I want to stress that this guidance is very difficult today,'' said Rick Ackel, the company's chief financial officer in a conference call to discuss the results.
Sanmina said net income after taxes and before one-time items was $31.9 million, or 10 cents a share, compared with $68 million, or 21 cents a share, in the year-earlier period.
Including one-time items, net income was $30.1 million, or 9 cents a share.
The average estimate of 19 analysts surveyed by Thomson Financial/First Call was for earnings of 11 cents a share, with a range of forecasts of 10 cents to 20 cents.
For the third quarter, Sanmina's revenues were $776 million, in line with guidance it gave on June 20 when it warned that a slowdown in its customers' end-markets would hurt revenues. In percentage terms, revenues were down 35 percent against the prior quarter and down 29 percent compared to the year-earlier period.
Sanmina said the slowdown in the electronics manufacturing services industry has forced it to scale back its earnings projections. When the company announced fiscal second quarter earnings on April 14, it projected third quarter revenue in a range of $900 million to $1 billion, and diluted earnings per share of 18 cents to 22 cents.
Ackel said the company expects to report fourth-quarter earnings of 8 cents to 10 cents a share off slightly from the average estimate of 11 cents by analysts surveyed by Thomson Financial/First Call.
The company said it will take a restructuring charge of $175 million to $200 million related to reductions in capacity, including a 15 percent to 20 percent reduction in PCB fabrication capacity throughout North America.
Sanmina shares closed down 8 percent at $17.81 on the Nasdaq. The stock is well off its 52-week high of $60.50 and slightly above its low of $17.53. The stock was down 7 cents at $17.74 in after-hours trade on Instinet.
On Monday, Sanmina announced that it would buy SCI Systems Inc.(NYSE:SCI - news) in a $3.9 billion deal that is expected to allow the combined company to better compete with other major contract manufacturers like Flextronics International Ltd. (NasdaqNM:FLEX - news) and Celestica Inc. (NYSE:CLS - news).
Salomon Smith Barney cut Sanmina to ``outperform'' from ``buy'' on Tuesday based on concerns related to Sanmina's ability to execute the deal and effectively integrate the two companies. Also on Tuesday, Deutsche Banc Alex. Brown cut SCI Systems to ``market perform'' from ``buy.''
For the year, Sanmina stock is down 49.5 percent. The contract manufacturing industry as a whole has seen similar losses, most notably for industry leader Solectron Corp. (NYSE:SLR - news), which is down 54.9 percent, and Flextronics, down 14.8 percent. |
