Solectron CEO to step down in a year
The world's largest contract manufacturer discloses in its earnings report the chief executive's plan to step down.
The Milpitas, Calif.-based company, which makes networking equipment and computers for Cisco and other large manufacturers, reported revenue of $3.1 billion and a loss of $2.6 billion, or $3.21 a share, for its fiscal fourth quarter, which ended Aug. 30. Excluding a pretax charge of $2.5 billion to "re-evaluate goodwill" and other charges, the company reported a loss of $33 million, or 4 cents a share. Analysts expected a loss of 3 cents a share.
In fiscal 2002, Solectron reported sales of $12.3 billion, compared with $18.7 billion in fiscal 2001. The company reported a net loss of $3.1 billion, or $3.98 per share, compared with a net loss of $124 million, or 19 cents per, in 2001. Excluding restructuring and other unusual charges, Solectron had a loss of $92 million, or 12 cents per share, for fiscal 2002, compared with earnings of $287 million, or 44 cents per diluted share, in 2001.
The retirement comes as a result of Nishimura's previously disclosed desire to step down at 65, the company said. He turned 64 recently.
"The board has agreed to move forward with the succession process now to ensure a seamless transition and continuity of our long-range plans," he said in a statement. "I will continue in my role as chairman of the board, and I will also continue as CEO until my successor is identified and the transition is completed."
The pending change in management comes amid turbulent times in the contract manufacturing sector. Although brand name companies such as Hewlett-Packard and IBM continue to outsource manufacturing, contract manufacturers are feeling the pinch of the technology downturn.
These companies also often have to live on thin margins. As a result, mergers are a frequent occurrence.