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After cutting jobs in Ireland, Sanmina-SCI reported first quarter earnings after the close of markets on Thursday, missing analysts' expectations.
The company formed by the December merger of Sanmina Corp. and SCI Systems Inc., reported pro forma net income for its fiscal first quarter of USD7.3 million, or USD0.03 per share, compared with a pro forma profit of USD177.3 million, or USD0.34 per share, a year ago. Analysts, on average, had been expecting a pro forma profit of USD0.04 per share for the quarter.
Revenue in the quarter was USD2.4 billion versus USD4.1 billion in the first quarter of 2000. The results reflect the company's merger with SCI, which was completed on 06 December, but exclude the costs associated with it.
"While we are gratified to see our revenues improve sequentially from the prior fourth quarter, we do not expect to see an economic rebound until the second half of this fiscal year," said Jure Sola, chairman and chief executive officer of Sanmina-SCI.
The contract electronics manufacturer projects second quarter fiscal 2002 revenue to be approximately USD2.275 billion to USD2.375 billion, and cash earnings per share to be approximately breakeven before merger, restructuring and other infrequent and unusual charges.
Sanmina-SCI also announced on Thursday the asset purchase of Alcatel's manufacturing facilities in Cherbourg, France; Gunzenhausen, Germany; and Toledo, Spain. Financial terms of the transaction, which includes a multi-year supply contract, were not disclosed. The transaction is expected to close by the summer of 2002. Approximately 1,500 employees work at these locations and will become Sanmina-SCI employees. "These facilities, which broaden our manufacturing capabilities, especially in final system build and test, are strategically located close to key European markets and will accelerate our international business development effort," said Sola. "Reflecting our commitment to the communications sector, upon completion of the transaction, Sanmina-SCI will have European centres for excellence in wireline access and RF microwave products."
Following Sanmina's acquisition of SCI in December, Sanmina-SCI announced in that it would cut 130 jobs and close its Blanchardstown facility. Although some staff from Dublin were given the option of transferring to Cork or to one of the 100 other global facilities in the Sanmina-SCI group, the majority of jobs are expected to go.
Earlier this month IBM and Sanmina-SCI announced an agreement under which IBM will outsource a large portion of its desktop personal computer manufacturing needs to Sanmina-SCI, and Sanmina-SCI will acquire IBM's NetVista desktop manufacturing operations in the US and Europe.
The company's stock closed Thursday on the Nasdaq down 5.03 percent to USD17.19.
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