January 29, 2013
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of electronics manufacturer Sanmina (NASDAQ: SANM ) sank 18% today after its quarterly results and outlook missed Wall Street expectations.
So what: Sanmina shares have rallied nicely over the past few months on signs of rebounding demand, but a first-quarter revenue miss -- $1.58 billion versus the average analyst estimate of $1.7 billion -- coupled with downbeat guidance for the current quarter is forcing Mr. Market to sober up. Operating margins even fell 50 basis points to 2.8% from 3.3% in the year-ago period, reigniting concerns over its profitability going forward.
Now what: Management now sees second-quarter adjusted EPS of $0.26-$0.32 and revenue of $1.40 billion-$1.45 billion, below the consensus of $0.32 and $1.49 billion, respectively. "Our second quarter guidance reflects seasonality along with continued uncertainty in the macro-environment," said Chairman and CEO Jure Sola. "Based on the pipeline of new business opportunities and the ramping of new programs in fiscal 2013, we should see improvements in the second half of the year." Given the strong macro and competitive headwinds working against Sanmina, however, I'd wait for a new 52-week low before considering buying into that turnaround talk.
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