CIBC World Keeps 'Sector Underperform' on Solectron

Analyst Todd Coupland says a number of critical issues regarding the timing of profitable growth and positive cash flow were left mostly unanswered

Solectron (SLR ) reported second-quarter loss per share (GAAP) from continuing operations of 11 cents. CIBC World keeps a sector underperform rating on the stock.

Analyst Todd Coupland says the second-quarter loss from continuing operations totaled 2 cents excluding charges, vs. his 5-cents loss estimate. Revenues were also a bit better than expected, but gross margins disappointed, as did the conference call. He says a number of critical issues regarding the timing of profitable growth and positive cash flow came up in the conference call, but were left mostly unanswered.

Coupland notes that the company sees 2 cents third-quarter pro forma loss to 1 cent EPS on $2.9 billion to $3.2 billion in revenues, implying flat to 4% sequential revenue growth but little improvement in EPS due to gross margin issues.

He trimmed his 10 cents fiscal year 2004 (August) adjusted loss per share estimate to a 6 cents loss.

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