Solectron shares fall after contract manufacturer cuts 12,000 jobs
Monday, March 24th 2003, 12:00 am
By: News On 6
SAN JOSE, Calif. (AP) _ Shares of Solectron Corp., a leading contract manufacturer for high-tech companies, edged higher Friday after announcing mixed second-quarter results and plans to cut 12,000 jobs and consolidate facilities.
The Milpitas, Calif.-based company also forecast a loss for the current quarter, saying business remains difficult. The announcements were made after the markets closed Thursday.
``There are a number of actions under way, but we must accelerate the pace of change,'' said Michael Cannon, Solectron's chief executive. ``With few exceptions, our end markets remain tough with little sign of recovery for the rest of this year.''
In trading on the New York Stock Exchange, Solectron shares rose 8 cents to close Friday at $3.49.
Solectron has been struggling to get its costs in line with demand for its services. Over the past nine quarters, it has reduced its work force by 40,000. The company expects to have about 62,000 employees at the end of the latest job cuts. Also Thursday, Solectron said it will reduce its manufacturing space by 3 million square feet, to 13 million square feet.
For the three months ending Feb. 28, Solectron lost $111 million, or 13 cents per diluted share, compared with a loss of $126 million, or 15 cents per share, in the same period last year.
Excluding restructuring charges of $57 million, an inventory charge of $76 million and a $4 million gain from the repurchase of debt, Solectron lost $9.7 million, or 1 cent per share in the second quarter.
Second-quarter sales were $2.82 billion, down 5 percent from the $2.97 billion reported last year.
Analysts surveyed by Thomson First Call had expected a loss of 1 cent per share before one-time charges for the period on sales of $2.95 billion.
Solectron expected no improvement in the third quarter, forecasting a loss of as much as 4 cents on sales on sales ranging from $2.6 billion to $2.9 billion.