Flextronics Pumps Up Profit

"I actually think that's a competitive advantage," he said.

Flextronics said its factories have made a smooth transition into compliance with the European Union's Restriction on Hazardous Substances law, which went into effect July 1. RoHS bans the use of some materials in electronics, and it has caused inventory headaches for some companies.

The company also said it expects to complete the sale of its software business to Kohlberg Kravis Roberts for $900 million in the September quarter. It will retain a 15% stake in the business.

For the September quarter, Flextronics said that revenue from continuing operations would range from $4.7 billion to $4.9 billion, and that EPS will be between 19 cents and 21 cents. Thomson First Call analysts forecast lower sales at $4.17 billion and an EPS at the low end of the range, at 19 cents.

Reversing its previous policy on limiting its guidance to one quarter, the company forecast $19 billion in sales from continuing operations and EPS of approximately 80 cents for the full year ended March 2007. The consensus estimate had expected the company to have $16.68 billion in revenue and an EPS of 77 cents.

Shares closed the regular session up 2%, or 21 cents, to $10.60.