Sony
Multi-Fineline depends on Sony Ericsson for 45 percent of its revenue, while Skyworks Solutions Inc. receives 18 percent of its sales and Flextronics gets 11 percent from the mobile- phone company, according to New York-based supply chain researcher Connexiti LLC.
“We believe theyll miss Street expectations by at least 2 percent, and we believe the stock is going to follow,” Richard Davenport, an analyst with Connexiti, said in an interview. “All three of these companies have had big runs in percentage terms in the past six weeks. We think the stocks are due for a haircut.”
First-quarter sales at Sony Ericsson, a joint venture of Sony Corp. and Ericsson AB, fell 36 percent from a year earlier because of weak demand for mobile phones, the company said April 17. The London-based company fell to fourth place in global handset shipments at the end of last year as consumers turned to competitors such as Apple Inc. with its iPhone and Research in Motion Ltd.s BlackBerry.
In response to the decline, Sony Ericsson said it would cut 2,000 jobs to reduce costs by 400 million euros ($525.3 million) annually by mid-2010. That followed another plan unveiled in January to reduce costs by 180 million euros by the end of 2009, according to the companys first-quarter earnings report.
Analyst Estimates
Analysts have projected Flextronics sales for the quarter that ended in March at $6.06 billion, the average of 13 estimates in a Bloomberg survey. The company, whose shares gained 48 percent this year before today, predicted $5.5 billion to $6.5 billion in sales in January.
Skyworks revenue for the period is predicted to be $168 million, the average estimate of 11 analysts; the company forecast $168.2 million. Its shares have increased 67 percent this year before today.
Multi-Finelines sales are predicted at $182.7 million, the average of three analysts. The company, whose shares gained 67 percent this year before today, projected sales of $170 million to $190 million in February.
Flextronics manufactures handsets for Sony Ericsson, while Skyworks supplies semiconductors and Multi-Fineline makes printed circuits for the devices.
A Big Customer
“Sony Ericsson has historically been a big customer of ours,” Lasse Glassen, vice president of investor relations for Anaheim, California-based Multi-Fineline, said in an interview. “But we have no comment” on Sony Ericssons “performance and how it affects us.”
Multi-Fineline lost 84 cents, or 4.1 percent, to $19.53 in Nasdaq Stock Market composite trading yesterday. Flextronics declined 6 cents to $3.78. Skyworks gained 46 cents, or 5.2 percent, to $9.25.