Flextronics forecasts strong revenue; cost cuts planned

Reuters

By Aurindom Mukherjee

(Reuters) - Contract electronics maker Flextronics International Ltd forecast current-quarter revenue largely above Wall Street estimates and said it planned to reduce its workforce and undertake other cost cuts.

Shares of Flextronics, which said its third-quarter net profit more than tripled, rose 15 percent in extended trading.

The Singapore-based company said revenue in the current quarter would be helped by strong demand for game consoles and smartphones. Flextronics makes the Xbox game console for Microsoft Corp and smartphones for Google Inc.

China's Lenovo Group Ltd, which is also a Flextronics customer, said on Wednesday it would acquire Google's Motorola Mobility smartphone business.

However, Flextronics Chief Financial Officer Christopher Collier said the company does not expect any near-term negative impact from the deal.

Motorola Mobility accounted for more than 10 percent of Flextronics' revenue in the quarter. Collier said Google is "entering into a top 10 customer" independent of Motorola.

Flextronics predominantly manufactures and assembles desktop PCs for Lenovo but does not make mobile phones for the company, UBS Equities analyst Amitabh Passi told Reuters.

It is a risk element, Passi added.

Flextronics forecast adjusted earnings of 18-22 cents per share on revenue of $5.9-$6.3 billion for the current quarter.

Analysts on average were expecting a profit of 19 cents per share on revenue of $5.97 billion (3.60 billion pounds), according to Thomson Reuters

I/B/E/S.

Microsoft last week posted a bigger-than-expected quarterly profit, boosted by a solid holiday season for its new Xbox game console.

Google's Motorola division, which unveiled its Moto X phone on August 1 at an event in New York City, shipped 500,000 Moto X worldwide in the third quarter, according to Strategy Analytics.

Flextronics's net income rose to $145.2 million, or 23 cents per share, in the third quarter, from $47.3 million, or 7 cents per share, a year earlier.

Excluding items, the company, which competes with Sanmina-SCI Corp and Jabil Circuit Inc, earned 26 cents per share.

The company, which also produces networking and other electronics gear, said revenue rose 17 percent to $7.18 billion.

Analysts on average had expected adjusted earnings of 23 cents per share on revenue of $6.70 billion.

Flextronics's shares rose to $8.52 in extended trading after closing up 0.5 percent at $7.70 on the Nasdaq.

(Reporting by Supantha Mukherjee and Aurindom Mukherjee in Bangalore; Editing by Maju Samuel)

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