Solectron (NYSE: SLR) fell US$1.69 to $19.80 in morning trading Tuesday, after the contract manufacturer of electronics issued a warning for the year ahead and announced plans to cut 10 percent of its jobs.
Analysts at Robertson Stephens, Prudential Securities, Bear Stearns, ING Barings, Thomas Weisel Partners and SG Cowen all reportedly downgraded Solectron shares following the news.
Milpitas, California-based Solectron reported results for the second quarter ended March 2nd that were in line with estimates. Sales rose 85.5 percent from a year earlier to $5.4 billion, while earnings per share rose to 30 cents from 19 cents. Analysts had expected the company to earn 29 cents.
Solectron chairman, president and chief executive officer Koichi Nishimura said that the company is “acting aggressively to meet the challenges posed by the current business environment,” which include “significantly lower customer demand.”
Solectron said it is cutting about 8,200 jobs. Many of the cuts took place over the past two weeks, the company said.
For the third quarter, Solectron said that it expects sales of $4.1 billion to $4.5 billion, with earnings before restructuring charges of 2 to 6 cents per share.
Third-quarter results will also reflect a pre-tax charge of $300 million to $400 million to cover the job cuts and other actions, Solectron said.
“The strength of our organization and the diversity of the markets we serve combined to generate second-quarter results consistent with our guidance,” Nishimura said. “Even so, changing economic conditions overall led to a significant reduction in demand from our customers as we moved through the quarter.”