Solectron to Cut 1400 Jobs Print E-mail
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Written by Mike Buetow   
Monday, 09 October 2006 06:09
MILPITAS, CA -- Electronics manufacturing services provider Solectron Corp. will cut 1,400 jobs -- about 2.5% of its workforce -- and close or consolidate roughly 11% of its square footage in Western Europe. The firm will take restructuring charges of $50 million to $60 million for the job cuts, which would be spread over the next 12 months.



The restructuring would lead to consolidation of about 700,000 sq. ft. of facilities in Western Europe and North America.

On a conference call Thursday with analysts, president and chief executive Mike Cannon said, "I'm confident we can get it done within a year." He did not give details of which exact facilities are affected by the restructuring.

A second phase of restructuring is planned to be completed by the end of the 2008, the company said. It will take an estimated $90 million to $100 million in charges during the second phase.

Solectron, which employs about 57,000 people, said about 90% of the charges would be cash expenditures.

The company said fiscal fourth-quarter net income rose to $36.8 million, up 220% from a year ago. Revenue climbed 7.4% to $2.9 billion last year, ahead of analysts' estimates of $2.71 billion.

For the quarter, inventory turns rose 0.3 times to 7.2 time sequentially but were down 0.9 times year-on-year, due in part to Cisco's Lean implementation plan, which pushed inventories back onto suppliers.
Solectron guided for sales of $2.60 billion to $2.80 billion in its next quarter, a roughly 3% sequential decline.

 

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