Solectron swings to a profit
By Rex Crum, MarketWatch
Last Update: 7:05 PM ET Mar 23, 2006
SAN FRANCISCO (MarketWatch) -- Solectron Corp. on Thursday reported a second-quarter profit, reversing a loss from a year ago, as the electronics contract manufacturer was helped by a gain from discontinued operations.
Solectron (SLR : Solectron Corporation
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Last: 3.98-0.02-0.50%
12:06am 03/24/2006
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SLR3.98, -0.02, -0.5%) said it earned $30.4 million, or 3 cents a share, compared to a loss of $2.2 million, or breakeven on a per-share basis, a share a year ago. Excluding charges and one-time items, Solectron said it would have earned $29.7 million, or 3 cents a share.
Revenue fell to $2.46 billion from $2.76 billion in the year-ago quarter. Analysts surveyed by Thomson First Call were looking for Solectron to earn 3 cents a share on $2.4 billion.
In after-hours trading, Solectron's stock rose 7 cents to $4.05. It fell 2 cents to $3.98 in the regular session.
Solectron, which builds products for technology bellwethers such as Cisco Systems Inc. (CSCO : Cisco Systems, Inc.
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CSCO21.41, -0.01, 0.0%) and Nortel Networks Corp. (NT : Nortel Networks Corp
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NT2.81, -0.03, -1.1%) , said $13.3 million of its net income came from a gain related to its discontinued operations. In its continuing operations, Solectron swung to a profit of $17.1 million compared to a $3.1 million loss a year earlier.
Solectron said Cisco was its largest customer in the quarter, accounting for $452 million, or 18%, of total revenue. Nortel was the second-largest customer, with sales of $292 million, or 12% of the overall sum.
While Solectron was able to come back to post a profit from a year-ago loss, its earnings and stock performance still lag behind competitors such as Jabil Circuit Inc. (JBL : Jabil Circuit Inc
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12:34am 03/24/2006
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JBL42.75, +4.51, +11.8%) , a company that has lower revenue than Solectron.
On Wednesday, Jabil reported a second-quarter profit of $69 million, or 32 cents a share, on revenue of $2.3 billion. In the year-ago period it made $46 million, or 22 cents a share, on $1.7 billion in revenue.
Jabil also raised its third-quarter forecasts to a profit of 39 cents a share, on revenue between $2.5 billion and $2.6 billion.
Analysts have also expressed concern that Jabil has been able to diversify into new markets such as the auto, instrumentation and medical industries, while Solectron faces the possibility of slow sales in some of its core business areas such as communications and networking.
Jabil's stock has also outperformed Solectron over the last year, rising 50% and closed Thursday at $42.75. Solectron has lost 10%.
For its third quarter, Solectron expects to report earnings, excluding items, of 3 cents to 5 cents a share on revenue in the range of $2.5 billion to $2.7 billion. Analysts were expecting Solectron to earn 4 cents a share on revenue of $2.53 billion. |
