Solectron’s Revenue Slips; It Will Restate Results for Three Years

Contract electronics manufacturer Solectron Corp. posted a drop in quarterly revenue and forecast more declines in the second half of the year and said it would restate three years of results.

Shares fell 9% in after-hours trading after Solectron posted a narrower net loss and operating earnings below the analyst consensus. The company, which makes products for name-brand corporations, also cited a “deep decline” in the outlook for general demand for products the company makes.

Solectron said Thursday that its net loss narrowed to $3.4 million, or break-even on a per-share basis, for its fiscal second quarter ended Feb. 28, from $68 million, or 11 cents, a year earlier. It cited lower costs for the smaller loss.

Revenue fell to $2.76 billion from $2.89 billion.

Milpitas, Calif.-based Solectron said that income from continuing operations excluding items was $40.3 million, or 4 cents a share.

Analysts surveyed by Reuters Estimates expected a profit of 5 cents a share, on average, on revenue of $2.71 billion.

The company also said that it would restate its results for fiscal 2002, 2003 and 2004 because of “errors related to account reconciliations and tax account roll-forwards.” Solectron said it did not believe the errors were material to its results.

Solectron forecast third-quarter earnings from operations before items of 4 cents to 6 cents a share on revenue of $2.6 billion to $2.8 billion, below analysts’ average estimate of 6 cents a share on revenue of $2.92 billion.

“Strength and demand from Nortel and from customers supplying European telecommunication carriers was offset by lower-than-expected demand from a wireless infrastructure customer,” said Chief Executive Michael Cannon on a conference call with analysts to discuss the results.

Cannon also said that contrary to its earlier prediction that revenue in the second half of 2005 would be greater than in the first half, that was now not the case.

“As the year unfolded we have seen our revenue impacted negatively because of end market weakness,” he said. “The deep decline in this business outlook for the second half of the fiscal year is clearly disappointing.”

Shares of Solectron fell 19 cents, or 4.3%, to $4.26 on the New York Stock Exchange. In after-hours trading on Inet, the stock fell to $3.87.