Subscribe to this Blog


Subscribe Via Email

Enter your email address:

Tuesday, April 29, 2008

Flextronics - That Merger with Solectron Will Cost You!

Flextronics recent acquisition and merger with competitor Solectron was the cause of a loss reported in the close of the recent quarter.  The merger which will help Flextronics continue to increase its substantial manufacturing marketshare did not come without its costs.

FLEX 10.36, +0.20, +2.0%) lost 11 cents a share on revenue of $7.78 billion. During the same period a year ago, the company earned $121 million, or 20 cents a share, on $4.68 billion in sales.

However, the results included more than $300 million in charges related to the Solectron acquisition, as well as stock-based compensation. Excluding those one-time items, Flextronics would have earned $215 million, or 22 cents a share.

Analysts surveyed by FactSet Research had forecast Flextronics to earn 22 cents a share on revenue of $7.78 billion.

Flextronics' profit falls on acquisition charges - MarketWatch

Stockholders hoping to skate past rough times in the transition may have to tighten up the strings in their skate shoes as Flextronics learns how to operate as a larger entity and pull Solectron into its own culture.  That and some cut backs in redundancies (layoffs), consolidations of partners (new contracts) and sale of some non-performing assets (get rid of obsolete equipment and redundantly located real estate). 

That all points to a slow year for Flextronics as industries in general work to deal with a US recession, higher energy costs, more expensive natural resources and possibly inflation.

0 comments: