slipped Thursday after it said earnings would be trimmed by a delay in its
( NT) outsourcing deal.
Shares of the Singapore-based electronics manufacturing company dropped 2% after Canada's Nortel said it would push back the transfer of two plants by three months. Nortel said it would do so to focus on its ongoing accounting inquiry.
Nortel had planned to transfer two Canadian plants to Flextronics in November 2004 and February 2005. It is now expected that the transfer of these facilities will occur in February 2005 and May 2005, the companies said.
Nortel said the delay wouldn't hurt its cash balance or the timeline for its cost-cutting plans, but Flextronics said the delay would nick earnings in the next couple quarters.
"Of course this will reduce revenue expectations in the December and March quarters, and it may reduce our EPS by 1 to 2 cents in each of those quarters as a result of the costs we have invested that won't be offset by the expected volume," said Flextronics CEO Michael Marks. "On the other hand, this will also delay some of the cash payments to Nortel Networks, which should allow us more time to accumulate cash from operations to fund such payments."
Analysts expect Flextronics to make 17 cents a share in its fourth quarter ending in December.
On Thursday, Nortel rose 2 cents to $3.39, while Flextronics dropped 25 cents to $12.83.