SCI Plunges 19% After Warning - TheStreet

SCI Plunges 19% After Warning

However, the outlook for the remainder of the year remains strong.
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Updated from 10:31 p.m. EDT

Shares of

SCI Systems

(SCI) - Get Report

plunged Wednesday after the electronic-components maker warned that its first-quarter profits would be lower than initially expected.

SCI Systems finished Wednesday regular trading down $10.38, or 19%, at $45.56.

The Huntsville, Ala.-based electronics components maker said that softer sales of personal computers and consumer electronics products were likely to push its sales for the quarter down to around $2 billion -- $300 million less than the company's original forecast. But improved margins would soften the effect on overall earnings, cutting earnings expectations by about 4 cents, to 34 cents per share.

The 17 Wall Street analysts surveyed by

First Call/Thomson Financial

had forecast quarterly earnings of 38 cents a share.

Gene Sapp, chairman, president and chief executive of SCI Systems, said in a statement that the company's expectations were revised downward primarily because of seasonal weakness in consumer electronics and finished PC demand. In addition, long lead times of certain electronic parts held up the initiation of new programs, contributing to the company's record backlog at the start of the quarter.

Sapp said the company is still on track to reach its initial projections for the year of $10.5 billion in sales and earnings of $1.70 to $1.74 a diluted share. He said the outlook for the remainder of the year remained strong, with backlog at an all-time high, strong bookings this quarter, and a number of recently announced or pending awards of new programs.

Sapp said SCI Systems is also pursuing "multiple acquisition opportunities" but declined to elaborate, saying only that additional announcements were expected by the end of 2000.