Benchmark Off the Mark

The last time I wrote about Benchmark Electronics (NYSE: BHE), the news was good. This time around, the company and its investors aren't so lucky. Benchmark issued a profit warning on Thursday for its fiscal third quarter, which sent its shares down nearly 10%.

Benchmark provides electronic manufacturing services -- basically, it assembles the electronic devices that we have all come to rely on. Benchmark expects revenue in the range of $670 million to $680 million, which is quite a shortfall from its previous estimate of $730 million to $770 million. It's not too surprising that its earnings estimates are also taking a whack. The expectation now is for earnings of $0.29 to $0.35 per share, rather than the previous guesstimate of $0.38 to $0.42.

Benchmark blamed "slower product and program transitions and softer-than-projected market demand" for its troubles. My guess is that these excuses are all intertwined. If its customers have a bunch of old stuff coming out of the factory that they can't sell as quickly as they hoped, they might hold off on product transitions for awhile.

While the bust in housing has everyone worried about the consumer, Benchmark's troubles may show that we should also be worried about weakening capital spending by businesses. Unlike peers Jabil (NYSE: JBL) and Flextronics (Nasdaq: FLEX), Benchmark's products really don't end up in the hands of consumers. Its largest customer is Sun Microsystems (Nasdaq: JAVA) -- and not many of us have a Sun server sitting beneath our desk.

The optimistic side of me wants to believe that Benchmark's troubles are its own -- and perhaps Sun's. This company does sometimes widely miss the mark in forecasting, so it doesn't look like an unreasonable conclusion to me, but time will tell.

More EMS Foolishness:

• Clean Bill of Health at Jabil?
• Benchmark Hits the Mark Again
• Wall Street Goes Ga-Ga for Jabil