Flextronics International Ltd. (FLEX) Tuesday reported a slip to loss in the fourth quarter from a profit last year, due mainly to a seventeen percent drop in revenues and restructuring charges.
Weak economic conditions and poor order intake have been instrumental in Flextronics posting successive quarterly declines in revenue, and the company has been trying to cut employee costs in a bid to prop up margins.
"We believe our end-markets have mostly stabilized and we are actively engaged in restructuring our cost base to drive better margins," said Chief Executive Mike McNamara.
"We are positioning our company for strong growth layered on top of our base business and powered by our strong bookings in Fiscal 2013," added McNamara.
Flextronics provides electronics manufacturing services to original equipment makers such as Dell, Hewlett-Packard, Microsoft, Cisco, among others.
The Singapore-based company's results were impacted by quarterly net sales that fell 17 percent to $5.3 billion from $6.37 billion last year. On average, 10 analysts polled by Thomson Reuters estimated revenues of $5.19 billion for the quarter.
Flextronics posted fourth-quarter net loss of $27 million or $0.04 per share, compared with net income of $124 million or $0.18 per share a year ago.
Results for the reporting period included pre-tax restructuring charges of $125 million, mainly related to employee severance and benefits.
Excluding items, adjusted earnings from continuing operations for the quarter were $86 million or $0.13 per share, compared to $166 million or $0.24 per share in the prior year.
Thirteen analysts, on consensus, expected earnings of $0.13 per share for the quarter. Analysts' estimates typically exclude special items.
Looking to the first quarter, Flextronics expect adjusted earnings in the range of $0.12 to $0.16 per share on revenues of $5.3 billion to $5.6 billion. Analysts currently estimate earnings of $0.16 per share on revenues of $5.45 billion.
GAAP earnings per share from continuing operations are expected to be lower by about $0.03 per share for intangible amortization and stock-based compensation expense, and by about $0.04 to $0.05 per share for the remaining restructuring charges.
The company expects to incur an additional $25 million to $30 million in pre-tax restructuring charges in the first quarter of fiscal 2014.
Flextronics believes upon completion of its restructuring activities, it will benefit from annualized savings greater than $150 million.
Earlier this month, Flextronics closed its acquisition of manufacturing operations in Tianjin, China, and assumed the management and operation of the Jaguariuna, Brazil facility from Motorola Mobility LLC, owned by Google Inc. (GOOG).
Flextronics stock closed Tuesday's regular trade at $7.15, up 2.44%, on a volume of 5.8 million shares on the Nasdaq. In after hours, the stock slipped $0.06 or 0.84%. In the past year, the stock trended in a range of $5.47 - $7.15, with a three-month average volume of 4.34 million shares.
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