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Solectron Forecasts Wider Loss

June 21, 2003|From Bloomberg News

Shares of Solectron Corp., the world's No. 2 maker of electronics for brand-name companies, fell 15% on Friday after the company said it expected the current fiscal fourth quarter's loss to be wider than forecast.

The shares dropped 68 cents, or 15%, to close at $3.71 on the New York Stock Exchange after falling as low as $3.58.

Milpitas, Calif.-based Solectron, which assembles computers and networking gear for clients including Hewlett-Packard Co. and Cisco Systems Inc., cut 5,000 jobs and closed five plants in the third quarter ended May 31 to lower costs as customers reduced orders.

The third-quarter net loss widened to $3.1 billion, or $3.74 a share, from $284.4 million, or 35 cents, a year earlier, the company said. Sales fell 7.2% to $2.82 billion as production costs dropped 6%, Solectron said.

Solectron, which has cut more than 40,000 jobs since 2001 and announced plans in March to fire 12,000 additional workers, may sell some businesses, Chief Executive Michael Cannon said without elaborating.

Most of the job cuts have come in the Americas and Europe as Solectron moves more manufacturing to lower-cost regions such as Asia.

The loss this quarter, excluding some costs, will be 2 cents to 6 cents a share on sales of $2.6 billion to $3 billion, Solectron said. Analysts had forecast a loss of 1 cent on sales of $2.79 billion, according to a Thomson First Call survey.

The company posted a net loss of $2.65 billion, or $3.21 a share, on sales of $3.12 billion a year ago.

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