FLEX($9.75) maintains guidance, sees stability
By Ben Berkowitz
LOS ANGELES, Aug 29 (Reuters) - Top contract manufacturer
Flextronics International Ltd. <FLEX.O> maintained its guidance
for the current fiscal quarter and the next quarter on
Thursday, saying it was seeing some stability in its business.
"I can say that the environment has stabilized
considerably," Flextronics Chairman Michael Marks said on a
mid-quarter conference call. "Business is much more stable than
it has been."
Marks also said the company would make no changes to its
guidance for the current fiscal second quarter or for the
December fiscal third quarter.
The average estimate of 23 analysts surveyed by Thomson
First Call had been for earnings per share, excluding items, in
this quarter of 8 cents, with a range of 7 cents to 10 cents,
on revenue of $3.22 billion.
For the December quarter, the estimate of 21 analysts had
been for earnings per share, excluding items, of 12 cents, with
a range of 9 cents to 15 cents, on revenue of $3.50 billion.
In late July Flextronics maintained its September quarter
guidance for earnings per share of 7 cents to 10 cents, but
expanded its revenue guidance to a range of $3.2 billion to
$3.4 billion. It had previously issued a flat forecast for $3.2
billion in revenue for the quarter.
Analysts widely expected the company to maintain its
guidance and a generally cautious tone about business
conditions and the prospects for recovery.
The contract manufacturing industry, which generates nearly
$100 billion a year in revenue, has been battered over the last
18 months by difficult economic conditions that have left many
manufacturers with problems of over-capacity and high costs.
Flextronics, like its competitors, has been trimming jobs
and moving operations to lower-cost regions like China.
END-MARKETS MOSTLY STABLE
Marks said that for the most part, the end-markets the
company serves were stable, with the exception of some
manufacturing of telecommunications equipment.
He also said the company's printed circuit board business
was improving, with pricing "stable to rising slowly."
Addressing questions about contract manufacturers buying
back their own debt, he said that in the future, if the company
had excess cash on the books, he would be inclined toward stock
or bond buybacks but that the board had not considered the
subject yet and that no buybacks were immediately forthcoming.
Since hitting a recent bottom of $5.88 on July 1, shares in
Singapore-based Flextronics' are up nearly 62 percent, as
analysts said the company would see the gradual effects of an
industry pickup and seasonal benefits in the from consumer
electronics manufacturing.
However, Marks downplayed the immediate impact of consumer
electronics to some extent.
"If the consumer is a little bit stronger or a little bit
weaker than expected we don't expect that to have a dramatic
impact on our business," he said.
The executive also said the company has closed its
acquisition of NatSteel Broadway and that it expects to finish
contracts by the end of the quarter on a deal announced in May
to buy factories from Casio Computer Co. Ltd. <6952.T>
((Ben Berkowitz, 213-955-6781; fax, 213-622-0056; e-mail,
ben.berkowitz@reuters.com))
REUTERS
*** end of story *** |
