Flextronics ( FLEX) continued its downward spiral Wednesday as one analyst downgraded the stock after the company posted disappointing earnings and guidance.

Flextronics blamed the divestiture of two of its divisions plus the loss of business of two handset customers for the weak second quarter. But the company also noted across-the-board softness among customers that first surfaced in July. Still, company executives said they expect "good growth" to resume in the March quarter and accelerate through calendar 2006.

Investors and analysts focused on the disappointing shorter-term outlook and latest results, punishing shares with a $2.95, or 24.4%, drop to $9.15 in recent trading.

In research notes Wednesday and on a postclose conference call Tuesday, analysts expressed palpable irritation at the company's results and guidance.

Credit Suisse First Boston analyst Michael Walker lowered his rating on Flex to neutral from outperform, while joining other analysts in slashing his estimates for the company and highlighting eroding margins.

"Amidst a multitude of moving parts, we boil Flex's results and guidance down to two factors: mismanaged expectations and weakening demand," Walker wrote. "Despite the magnitude of the shortfall and a developing credibility issue ... given the possibility that incoming CEO McNamara is attempting to reset the bar, we are adopting a neutral stance and would look to revisit the stock below $9."

CSFB has co-managed a public offering for Flextronics in the past year.

Even one bullish analyst, Carter Shoop of Deutsche Bank, another co-manager, titled his note on Flextronics Wednesday morning "Taking Estimates Lower, Again."

"We were surprised by the magnitude of the miss/reduced guidance," Shoop wrote. "It now appears that end demand/margins were worse than expected in the September quarter, and that many of Flex's new wins have been pushed out."

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