Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (39769)	6/20/2003 2:11:11 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 71625

Solectron sees loss widen, shares drop By Reuters June 19, 2003, 5:09 PM PT Solectron posted on Thursday a sharply wider quarterly net loss as restructuring charges mounted, and revenue fell 7 percent on sluggish demand for the computers and network equipment it makes for name-brand technology companies. Solectron's loss excluding one-time items was wider than analysts had expected, and the company warned that its loss in the current quarter could also be deeper than Wall Street had forecast. Shares in Solectron fell more almost 13 percent in after-market trade to $3.84 after closing at $4.39 on the New York Stock Exchange. Solectron, which builds products for IBM, Hewlett-Packard, Cisco Systems and other tech companies, said its fiscal third-quarter net loss widened to $3.1 billion, or $3.74 per share, from a net loss of $284 million, or 35 cents a share, a year earlier. Milpitas, Calif.-based Solectron said revenue in the quarter ended May 31 slipped by almost 7 percent to $2.8 billion, from $3 billion a year earlier. As a result of charges, Solectron said it would not be in compliance with covenants of an undrawn $450 million credit facility. The company said it is in talks with bankers to obtain an amendment to the minimum tangible net worth covenant and believes it will be successful. "While this quarter was complicated with a number of revaluations that had a negative impact on earnings, we believe the resulting balance sheet is stronger and better positions us for the future," said Mike Cannon, Solectron's chief executive. Solectron, which cut about 5,000 jobs in the third quarter, said its restructuring plan was on schedule as it shifts production to low-cost regions. The company said in March that it planned to cut 12,000 jobs, or 16 percent of its work force, in a $300 million restructuring to better compete in a low-margin industry marked by ruthless price competition and strapped with excess capacity. "Solectron clearly is not a story right now about quarterly results. It's more about the restructuring," said Shawn Severson, an analyst with Raymond James and Associates. Excluding charges of $2.8 billion for goodwill, intangible assets and deferred tax assets, and a restructuring charge of $223 million, Solectron reported a third-quarter loss of $79 million, or 10 cents per share. Solectron had forecast a loss before charges in a range of 4 cents to 1 cent per share and sales of $2.6 billion to $2.9 billion amid weak markets and intense competition from rivals such as Flextronics International, Sanmina-SCI and Celestica. Analysts had on average expected Solectron to post a loss before items of 3 cents a share, according to both Reuters Research and tracking service First Call. Solectron said it expected revenue in its current fiscal fourth quarter of $2.6 billion to $3 billion, with a loss before charges in the range of 2 cents to 6 cents per share. Story Copyright © 2003 Reuters Limited. All rights reserved.