Was Solectron too hard to turn around?

Michael Cannon this week left Solectron to take a new position at the computer maker Dell's management team. According to an article in My-ESM there is still a lot to do at the company and there is some indications that the market suspects that the task got too big for Cannon to handle. "We would argue that a lot is still left to do at Solectron to complete its turnaround," said Kevin M. Kessel, an analyst at Bear Stearns & Co. Inc., in a report. "Whether or not Cannon lost confidence in a possible turnaround is hard to say", he added. Solectron tried to allay these concerns during a conference call Wednesday by insisting that its fiscal year 2007 revenue goal of $11.5 billion remains unchanged. Analysts are equally adamant, though, that it's not enough for the company to record strong revenue growth as it has over the last few quarters. Profit margins, they said, must also begin to strengthen. For that to happen, Solectron must improve its "footprint and internal IT systems to create a more nimble company," according to Bear Stearns' Kessel.