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Sanmina Shares Tank 12% On Weak Outlook

Shares of Sanmina Corp. (SANM) tanked 12% on Monday after the electronics manufacturing company's issued a weak outlook for the first quarter. The company also announced plans to "right size" the company due to soft demand in the first half of next year.

San Jose, California-based Sanmina's fourth-quarter surged to $19.76 million or $0.27 per share from $0.78 million or $0.01 per share last year.

Adjusted earnings for the quarter were $60.61 million or $0.84 per share for the three-month period. Analysts polled by Thomson Reuters estimated earnings of $0.77 per share for the quarter.

The company's revenue for the quarter rose 0.5% to $1.89 billion from $1.88 billion last year.

Looking forward to the second quarter, Sanmina expects adjusted earnings of $0.65 to $0.75 per share and revenues of $1.725 billion to $1.825 billion. Analysts currently estimate earnings of $0.87 per share and revenues of $2.18 billion for the quarter.

"We expect demand to be soft in the first half of the fiscal year as a result of excess inventory in the channel, slower than anticipated 5G deployment and global economic uncertainty. As a result, we have initiated a plan to right size the organization to further improve operational efficiencies and optimize our cost structure. This right-sizing, coupled with our focus on the quality of our revenue, will support our ongoing operating margin, non-GAAP earnings per share and cash generation objectives," said CEO Hartmut Liebel.

The company said it has adopted a company-wide right-sizing plan, under which it expects to incur restructuring charges of about $10 million to $20 million, consisting primarily of cash severance costs.

SANM closed Monday's trading at $31.80, up $0.33 or 1.03%, on the Nasdaq. The stock, however, dropped $3.69 or 11.62% in the after-hours trade.

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