Sat, Jul 26, 2003 - Page 11 News List

Flextronics' Q1 loss expands after it closes two plants

BLOOMBERG

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 US and Mexico.

The net loss in the quarter ended June 30 expanded to US$289.7 million, or US$0.56 a share, from US$131.2 million, or US$0.25, in the same period a year earlier, Singapore-based Flextronics said in a statement. Sales fell less than 1 percent to US$3.11 billion from US$3.13 billion.

Flextronics is reducing circuit-board production to end losses in that business. Closing the plants, which make boards for mounting computer chips and other electronic components for everything from computers to cellular phones, cost US$230 million in the quarter. There will be US$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," he said.

Deutsche Bank has a banking relationship with Flextronics.

About 500 jobs, or 10 percent of the company's circuit-board staff, are being cut, chief executive Michael Marks said on a conference call with investors. The business has been losing US$0.02 to US$0.03 a share a quarter, Marks said in April.

Sales this quarter will be US$3.3 billion to US$3.5 billion. The average Thomson Financial analyst estimate was US$3.35 billion.

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