MILPITAS, CA, Dec. 21 -- Solectron Corp. today reported sales of $2.7 billion for its fiscal first quarter, flat with 2004 and down from $3 billion sequentially. GAAP income from continuing operations were $47 million for the quarter ended Nov. 30, versus a GAAP loss of $52 million last year. The Q1 2005 results don't include a $2 million restructuring charge.

The drop in revenues was due to weakness in consumer demand for set-top boxes and 3-G wireless handsets, and lagging semiconductor equipment orders, Solectron said. Sales of networking gear also fell.

Earnings met the company's previous guidance.

The firm guided for sales of $2.65 billion to $2.8 billion for the February quarter. "Looking forward, we expect revenue growth in the second half of the year, driven by the expected ramp of recent wins and improved demand," said Mike Cannon, president and chief executive.  

Gross margins improved 40 basis points sequentially and operating expenses were cut to $96 million. Cash flow from operations was $190 million. Inventory was reduced $52 million. Inventory turns were 7.1.