Singapore -- Flextronics, the world's largest EMS provider, reported net sales rose 25% to $3.88 billion for its recently ended first quarter.

Net income rose 283% to $78.3 million, excluding restructuring and other charges. GAAP net income was $74.3 million, up from a loss of $289.7 million a year ago. Cash flow from operations was $166 million.

Gross and operating margins were up 110 basis points.

Michael Marks, chief executive, said in a statement, "The improvement in margins was driven by effective management of our operations, which included aggressive restructuring in prior periods as well as continuous cost reductions. Additionally, a healthier demand environment not only improves our factory utilization and increases overhead absorption, but also provides an opportunity for us to improve our pricing."

According to one analyst, sales from Sony Ericsson increased roughly 40% sequentially to 15% of total revenue in the quarter. Sales to other customers dropped about 2% sequentially, said Deustche Bank. Communications infrastructure sales were down moderately, DB said.

Inventories rose by four days, to 34 days.

Flextronics guided for September earnings of 15 to 18 cents and December earnings of 21 to 24 cents.

Yet Flextronics should benefit from greater outsourcing of handsets. "Anecdotes from Nokia, Samsung, Sony Ericsson, Intel, AMD [and] Philips suggest that handset demand in 2Q was healthy," wrote analyst Chris Whitmore of Deustche Bank. "We expect further commoditization of the handset market to force more outsourcing, benefiting ODMs like Flextronics."

• Prev
• Next