Updated from 4:49 p.m. EDT Flextronics ( FLEX) beat the Street's first-quarter earnings forecast by 2 cents, and sales also topped estimates. Shares of the company rose 35 cents, or 3.3%, in after-hours trading to $10.95 on Instinet. Reporting after the bell Tuesday, the electronics manufacturing services company said it earned $84.5 million, or 14 cents a share, jumping up from $58.7 million, or 10 cents a share in the year-ago quarter. Excluding restructuring and other charges, Flextronics earned $103.7 million, or 18 cents a share, rising from $99.6 million, or 17 cents a share in the same quarter last year. On that basis, the company bested predictions of analysts, who forecast 16 cents a share for the quarter. Sales totaled $4.1 billion, growing from $3.82 billion over the same period last year. Analysts were looking for $3.81 billion. "There has been a reacceleration of significant growth in our core EMS business, which includes design, vertically integrated manufacturing services, components and logistics," Mike McNamara, CEO of Flextronics said in a prepared statement. During a subsequent call with financial analysts, the company said it saw an increase in demand across all of its business segments, with its mobile division making the largest jump in revenue. The company expects the bullish trend to continue, with growth across all segments for the next quarter. Because of business wins from both new and existing customers, the company raised its revenue growth rate expectations for the full year 2007 to 25%. When asked if he is concerned about "growing pains" as growth accelerates, McNamara said that the company already runs a complex business (the company has 99,000 employees in over 30 countries) and can anticipate and handle the challenges.
"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.