SAN JOSE -- Flextronics today reported record net sales of $5.4 billion for its third quarter, up 31% from a year ago. For the period ended Dec. 31, GAAP net income increased 183% to a record $119 million.

"Flextronics is aggressively taking market share and is in position to exceed its long-term financial goal of 15 to 20% year-over-year operating growth in calendar 2007," wrote analyst Carter Shoop of Deutsche Bank Equity Research in a research note last night.

Flextronics, the world’s second-largest EMS company, guided for March quarter revenue of $4.8 billion, equal to year-over-year growth of 36%.

"Last year we initiated our strategy to accelerate revenue and profit growth in our core EMS business. A central part of this strategy is the organization of our resources around a market focused approach, which allows us to better serve our customers," said Mike McNamara, chief executive.

For the quarter, cash flow from operations was $350 million. Return on invested capital was 11.5%, up 120 basis points from a year ago and is at its highest level in almost six years. The cash conversion cycle improved 2 days sequentially to a reported industry-leading 12 days. Gross margins slipped to 5.3%. Inventory turns rose 1.3 times, to 8.1 turns.

The company was helped by strong handset demand, which were up 30% sequentially. Consumer electronics and digital equipment rose 15%.

The company paid down $240 million in debt during the quarter, and cut inventory by $79 million sequentially.