Solectron may cut 850 jobs

Electronics manufacturer Solectron Corp. (NYSE: SLR) said Friday it may eliminate 850 jobs, or about 2 percent of its total work force.

The company, which cited "changing market conditions" for the move, is transferring its cell phone production operations to Guadalajara, Mexico.

Shares were down 1 1/4 to 39 3/4S. The stock has been weathering the tech downturn well, and is still not far below its 52-week high of 49 1/2. Shares got a boost when the company reported a strong quarter in March, which was cheered by analysts.

The decision to eliminate up to 475 core and 375 temporary positions, which has not yet been finalized, was driven by the need to keep costs low, the company said.

Fred Forsyth, president of Solectron Americas, said the Georgia plant did well, but the company couldn't "ignore the reality of an increasingly cost-conscious marketplace."

"Most of our competitors and customers have already moved cell phone manufacturing to lower labor-cost geographies, and we must take this action to remain competitive," said Forsyth, in a statement.

Solectron, which employs a total of 6,700 in its Mexico facility, said 700 employees will remain at the company's Suwanee, Ga., headquarters, and employees who are cut will have opportunities to transfer to other Solectron facilities, and be provided with separation benefits.

The company added that it does not expect these actions to change its financial outlook for fiscal 2000, which ends in August.

Solectron's competitors include Celestica (NYSE: CLS), Flextronics (Nasdaq: FLEX), and SCI Systems (NYSE: SCI).

Reuters contributed to this report.