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Thomas Weisel Cuts Solectron Rating


Thomas Weisel downgraded Solectron (SLR) to market perform from buy.

On Thursday the company agreed to buy C-Mac Indus in a $2.7 billion deal. Analyst Jim Savage thinks the company will likely face serious near-term operational issues as it tries to integrate C-Mac into what is, in his opinion, an already bulky and less-than-optical management structure. Savage thinks Solectron's management needs to focus on developing the infrastructure necessary to effectively and profitably grow its business. He's concerned that Solectron's supply chain management efforts and service levels may become compromised as a result of recent acquisitions, which could result in erosion of customer relationships.


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