Updated from 4:38 p.m. EDT
third-quarter sales topped analysts' estimates and its profit was in line with consensus, the electronics manufacturer said the results should have been better, and it will restructure to improve profitability.
On a call late Thursday, executives said that the company failed to execute on new product ramps, costing the company between 10 and 20 basis points in gross margins.
The company needs to achieve profitability on new product launches faster, executives said.
They declined to give information on how many job cuts or plant closings will occur, and when it might take place. One factor that executives will consider is the balance of work at high cost and low cost geographies.
Shares of the Milpitas, Calif., company rose 2 cents, or 0.6%, to $3.40 in after-hours trading.
For the third quarter, the company earned $42.4 million, or 5 cents a share, reversing a loss of $66.7 million, or 7 cents a share, in the same quarter of 2005.
Excluding items, the company earned $38.9 million, or 4 cents a share, essentially flat compared with $38.8 million, or 4 cents a share, a year ago. The figure is consistent with Thomson First Call consensus.
On the top line, Solectron beat the Street's expectations, reporting $2.7 billion for the quarter vs. $2.6 billion in the year-ago quarter. First Call analysts pegged revenue of $2.6 billion.
For the fiscal fourth quarter, the electronics manufacturing services company said it expects non-GAAP EPS between 4 cents and 6 cents. That's in the range of analysts' forecast of 5 cents.
The company estimated revenue for the fourth quarter between $2.6 billion and $2.8 billion; analysts forecast $2.68 billion in sales, on average.
"I am pleased that Solectron delivered a third consecutive quarter of revenue growth and that we continue to deliver on our commitment to return to growth in fiscal 2006," CEO Mike Cannon said in a statement. "We believe we have not yet tapped the full potential of the company," he added.
Solectron isn't alone in its execution problems and subsequent restructuring. On Wednesday, its competitor
said it would
slash jobs and shut factories in high cost locations to spark earnings.