SAN JOSE -- Flextronics, the world's second largest EMS company, reported fiscal third quarter net sales of $8.2 billion, down 9.9% year-over-year.

For the period ended Dec. 31, the adjusted net income fell 49% to $126.8 million. Operating income was $185.8 million, down from $300.1 million last year. Flextronics generated $210 million in cash during the quarter.

Adjusted operating margins were 2.3%, down 100 basis points.  All end-markets were down sequentially except for consumer, which rose 4%. Mobile and infrastructure saw big drops on declines in sales to Nortel, which accounted for 33% of decline.

Flextronics took a non-cash charge of $5.9 billion in the quarter to write off the entire carrying value of its goodwill, plus a distressed customer charge of $145 million associated with Nortel's bankruptcy filing. The latter includes $98 million in inventory writedowns. Nortel's payment terms were also amended to five days, the company said.

During the quarter, Flextronics reduced inventory by $1 billion and has generated $658 million in free cash flow year-to-date

Flextronics guided for March quarter revenue of $5.5 billion to $6.5 billion.

On a conference call Wednesday, chief executive Mike McNamara said the company is "very bullish" on the medical end-market, adding "more and more outsourcing opportunities are coming out of this environment. And it is an industry that is very reasonably new in terms of outsourcing. We think that is a big upside." 

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