Sanmina-SCI jobs looking overseas

More work abroad will spur North America cuts

Wednesday, July 21, 2004

By BRIAN LAWSON

Times Business Writer brianl@htimes.com

Sanmina-SCI reported strong third quarter sales and income Tuesday and announced it will spend about $100 million over the next 18 months to cut its manufacturing business in North America and move the work overseas.

The planned restructuring will begin next quarter, Sanmina-SCI President Randy Furr told stock analysts during a conference call Tuesday.

The restructuring is aimed at reducing costs by moving labor-intensive manufacturing out of high-cost areas like North America and Western Europe to lower-cost locations in Asia and Eastern Europe

Furr and other company officials declined to comment on specifics about the restructuring. Sanmina-SCI currently employs about 1,700 people in Huntsville, down from about 3,600 when the former Huntsville-based SCI Systems merged with San Jose, Calif.-based Sanmina in 2001.

The company has some 20 plants in the United States and Canada.

Furr said Sanmina-SCI has nearly completed its $250 million restructuring effort announced in 2002, but with business not rebounding as expected and low-cost locations providing better-than-expected results, management decided to make more cuts and shift work to Asian and European plants. The company expects to save $22 million to $24 million per quarter, once the restructuring is completed.

The company provides electronic manufacturing services for equipment makers like IBM and Hewlett-Packard. Sanmina-SCI has two plants and a design center in Huntsville and a plant in Lacey's Spring. The plant near the Tennessee River was the subject of a $12 million upgrade that began last year.

The company's former headquarters on Clinton Avenue and two other Huntsville plants no longer in use are for sale.

Jure Sola, chairman and CEO of Sanmina-SCI, said the decision to reduce the North American work force was driven by the company's customers and the need to stay competitive.

Sola said the company expects to continue to do defense and medical instrumentation work and other high-end manufacturing activities in North America.

In the third quarter, Sanmina-SCI reported sales of $3.07 billion, up from $2.6 billion in the third quarter of 2003.

Net income for the quarter, excluding restructuring and other charges, was $34.3 million, or 7 cents per share. That is up from $6 million, or 1 cent per share, during the same period in 2003.

When restructuring charges are included, the company reported net income of 2 cents per share, or $11.3 million.

Furr and Sola said business was better than expected in a number of areas in the third quarter and the company expects strong results to continue. Sanmina-SCI estimates fourth quarter sales will be $3.1 billion to $3.3 billion, with net income, excluding charges, of 8 to10 cents per share.

"Our customers are speaking much differently today," Furr said.

In early trading today Sanmina-SCI stock, traded on the Nasdaq under tthe ticker symbol "SANM," was up 92 cents to $7.79.




Sanmina-SCI jobs looking overseas More work abroad will spur North America cuts Wednesday, July 21, 2004 By BRIAN LAWSON Times Business Writer brianl@htimes.com Sanmina-SCI reported strong third quarter sales and income Tuesday and announced it will spend about $100 million over the next 18 months to cut its manufacturing business in North America and move the work overseas. The planned restructuring will begin next quarter, Sanmina-SCI President Randy Furr told stock analysts during a conference call Tuesday. The restructuring is aimed at reducing costs by moving labor-intensive manufacturing out of high-cost areas like North America and Western Europe to lower-cost locations in Asia and Eastern Europe Furr and other company officials declined to comment on specifics about the restructuring. Sanmina-SCI currently employs about 1,700 people in Huntsville, down from about 3,600 when the former Huntsville-based SCI Systems merged with San Jose, Calif.-based Sanmina in 2001. The company has some 20 plants in the United States and Canada. Furr said Sanmina-SCI has nearly completed its $250 million restructuring effort announced in 2002, but with business not rebounding as expected and low-cost locations providing better-than-expected results, management decided to make more cuts and shift work to Asian and European plants. The company expects to save $22 million to $24 million per quarter, once the restructuring is completed. The company provides electronic manufacturing services for equipment makers like IBM and Hewlett-Packard. Sanmina-SCI has two plants and a design center in Huntsville and a plant in Lacey's Spring. The plant near the Tennessee River was the subject of a $12 million upgrade that began last year. The company's former headquarters on Clinton Avenue and two other Huntsville plants no longer in use are for sale. Jure Sola, chairman and CEO of Sanmina-SCI, said the decision to reduce the North American work force was driven by the company's customers and the need to stay competitive. Sola said the company expects to continue to do defense and medical instrumentation work and other high-end manufacturing activities in North America. In the third quarter, Sanmina-SCI reported sales of $3.07 billion, up from $2.6 billion in the third quarter of 2003. Net income for the quarter, excluding restructuring and other charges, was $34.3 million, or 7 cents per share. That is up from $6 million, or 1 cent per share, during the same period in 2003. When restructuring charges are included, the company reported net income of 2 cents per share, or $11.3 million. Furr and Sola said business was better than expected in a number of areas in the third quarter and the company expects strong results to continue. Sanmina-SCI estimates fourth quarter sales will be $3.1 billion to $3.3 billion, with net income, excluding charges, of 8 to10 cents per share. "Our customers are speaking much differently today," Furr said. In early trading today Sanmina-SCI stock, traded on the Nasdaq under tthe ticker symbol "SANM," was up 92 cents to $7.79. Copyright 2004 al.com. All Rights Reserved.