Solectron reportes lower revenues

The company reported GAAP income from continuing operations in the first quarter of $47 million, or 5 cents per share, compared with a GAAP loss from continuing operations of $52 million, or 6 cents per share, in the first quarter of last year. Excluding $2 million of charges related to adjustments of previously announced restructuring, Solectron had non-GAAP net income from continuing operations of $49 million, or 5 cents per share. The company reported lower revenues from the previous quarter primarily due to greater than expected weakness in the consumer market for set-top boxes and 3-G wireless handsets, as well as in the semiconductor capital equipment sector of the industrial market. In addition, the company saw lower demand in the networking market. "Despite lower sales, I am very pleased that earnings per share improved to five cents, which was the midpoint of our guidance," said Mike Cannon, president and chief executive officer. "Our focus on profitability delivered a 40 basis-point improvement in gross margins from the prior quarter and a reduction in operating expenses to $96 million. In addition, we generated strong cash flow from operations of approximately $190 million. Looking forward, we expect revenue growth in the second half of the year, driven by the expected ramp of recent wins and improved demand." The company made further improvements in working capital during the quarter with a reduction in accounts receivable of $120 million and a reduction in inventory of $52 million. Inventory turns were 7.1 and the company's cash conversion cycle was 51 days. Capital expenditures were $32 million, depreciation and amortization were $49 million, and return on invested capital improved to 10.5 percent.