Flextronics Loss Widens on Cost of Factory Closures

Flextronics International Ltd., the world’s largest maker of electronics for other companies, said its fiscal first-quarter loss widened because of costs to close two printed circuit-board factories in the U.S. and Mexico.

The net loss expanded to $289.7 million, or 56 cents a share, from $131.2 million, or 25 cents, in the same period last year. Sales in the quarter ended June 30 fell less than 1% to $3.11 billion.

Flextronics, which is based in Singapore with offices in San Jose, is reducing its production of circuit boards to end losses in that business.

Writing down assets and closing the plants, which make boards for mounting computer chips and other parts for everything from computers to cellular phones, cost $230 million.

There will be $85 million in additional expenses in the next few quarters, the company said.

“We view restructuring that business as good news,” said Deutsche Bank analyst Chris Whitmore, who has a “hold” rating on Flextronics shares and said he doesn’t own any.

“It’s a tough business. We think pricing in that business is really bad,” Whitmore added.

Deutsche Bank has a banking relationship with Flextronics.

“We believe that this business should be profitable by the end of this fiscal year,” Chief Executive Michael Marks said.

Flextronics also builds Microsoft Corp.’s Xbox video-game console, inkjet printers for Hewlett-Packard Co. and personal computers for Dell Inc. It helped design a new wristwatch with a built-in electronic organizer for Fossil Inc.

Flextronics shares fell 32 cents to $10.88 in extended trading after the earnings were released. They dropped 21 cents to close at $11.20 on Nasdaq.