offered a wealth of bad news for investors with its second-quarter report on Wednesday: a greater than $1 billion loss in the quarter, sales that fell shy of the Street's estimates, and disappointing guidance.
In response, investors sold off the shares. In recent after-hours trading, the company's stock was off 18 cents, or 4%, to $4.32.
In its quarter ended April 2, the electronics contract manufacturer lost $1.04 billion, or $1.99 a share. The loss dwarfed that posted by the company in the year-ago period; then, it lost $43.86 million, or 9 cents a share.
The company's sales, meanwhile, were basically flat with its second quarter last year, increasing less than 1% to $2.89 billion.
The company's loss included two big items, both related to its decision to shift manufacturing from the U.S. to lower-cost regions. First, the company estimated that it would take a $600 million charge to write off the goodwill and long-lived assets on its domestic operations. Second, the company took a $379 million charge to write down its tax assets.
The company had accumulated tax credits as a result of prior losses. Normally, companies are able to use those credits to reduce their taxes once they start turning a profit. But because Sanmina is shifting operations overseas, it no longer expects its U.S. operations to generate enough profits to use up the tax credits.
Excluding those charges, restructuring expenses and other charges, the company would have earned $29.3 million, or 6 cents a share.
On this basis, analysts polled by Thomson First Call had predicted the company would earn 5 cents a share in the quarter excluding certain charges on $2.99 billion of sales. The company
forecast in January that it would earn 4 cents to 7 cents a share on this non-GAAP basis on revenue ranging from $2.85 billion to $3.15 billion.
In a statement, company CEO Jure Sola tried to put a positive spin on the quarter. The $1 billion loss was the result of the success the company has had in setting up its overseas operations, he argued.
"Notwithstanding these writedowns we have had to absorb this quarter, we believe our restructuring activities will enhance our competitiveness in the market and yield positive returns for our shareholders," Sola said in the statement.
The flat revenue the company recorded in the quarter were due to expected seasonality in the company's personal and business computer systems division, Sola said. Indeed, they were a good sign, he said.
"We believe this achievement reflects the improving fundamentals of our high-end technology markets," he said.
In its third quarter, Sanmina expects to earn 5 cents to 7 cents a share excluding items on sales of between $2.8 billion to $3 billion.
Wall Street had estimated that the company would earn 8 cents a share on $3.14 billion in sales in the current period.
Shares of Sanmina closed regular trading off 11 cents, or 2.4%, to $4.50.