Flextronics rebounds after profit drop
Published: Feb. 1, 2006 at 5:00 p.m. ET
Rex Crum
SAN FRANCISCO (MarketWatch) -- Flextronics International shook off concerns about its sharp drop in third-quarter profit, as the electronics contract manufacturer's shares closed up almost 3% after being in the red for most of Wednesday.
Flextronics FLEX, -0.44% ended the day rising 30 cents, to close at $10.76, after being down as much as 7% during the session.
Late Tuesday, the company said it earned $42 million, or 7 cents a share, compared with $98.7 million, or 17 cents, a year ago. Revenue fell 2% to $4.19 billion from $4.27 billion.
Excluding $76 million in charges and one-time items, Flextronics would have earned $118 million, or 20 cents a share. By that measure, analysts surveyed by Thomson First Call had forecast Flextronics to earn 19 cents a share on $4.06 billion in revenue.
Sales were affected by the lack of revenue from the company's network-services division, which Flextronics divested in its prior fiscal year. Without the $228 million the division reported a year ago. Flextronics sales would have risen 3% from the prior year.
Flextronics is known for making computing and communications products for companies such as Dell Inc. DELL, +0.20%, Microsoft Corp. MSFT, +1.05% and Motorola Inc. MOT.
Raymond James analyst Shawn Severson cut his rating on Flextronics to outperform from strong buy, citing the company's own March quarter forecasts, which will be affected by a delay in acquiring facilities from Nortel Networks Corp. NT.
The company is in the process of buying several manufacturing sites from Nortel, and said that the transfer of Nortel's manufacturing operation in Calgary, Alberta, has been rescheduled from the March quarter to the June quarter. Flextronics said that the delay would allow the completion of several information-systems changes intended to simplify and improve the transition and its future operations.
Because of the delay in transferring the Nortel operations, Flextronics expects to report a fourth-quarter profit of between 13 cents and 14 cents a share. Excluding charges and items, the company estimates it will earn15 cents to 16 cents a share, on revenue of $3.5 billion to $3.7 billion.
Analysts had forecast Flextronics would earn 16 cents a share, on $3.68 billion in revenue for the quarter.
Rex Crum is a technology reporter for MarketWatch in San Francisco. Follow him on Twitter @mktwcrum.