What: Shares of Sanmina Corp. (SANM 0.27%) dropped 15.2% Tuesday after the electronics manufacturing services company reported in-line fiscal third-quarter 2016 results, but followed with disappointing forward guidance.
So what: Quarterly revenue climbed 8.5% year over year, to $1.67 billion, which translated to a 6.9% increase in adjusted net income, to $48.2 million, and 18.9% growth in adjusted net income per share, to $0.63. Sanmina repurchased 0.4 million shares during the quarter for $9.9 million.
Sanmina CEO Jure Sola noted the results were within his company's guidance, and attributed the performance to the ramp of new programs.
"Executing our business plan, expanding our existing customer relationships and growing with new customers positions Sanmina for a better future," Sola elaborated. "We will continue to invest in technologies and capabilities that strengthen our value proposition and enhance shareholder value."
Now what: For the current quarter, however, Sanmina anticipates revenue between $1.675 billion and $1.725 billion, which should translate to adjusted earnings per diluted share between $0.64 and $0.68. Analysts, on average, were looking for revenue of $1.72 billion and adjusted earnings of $0.67 per share, both near the high ends of Sanmina's guidance.
During the subsequent conference call, Sola explained, "The way we see, [the] global economy is still challenging, but stable and slowly moving in the right direction. I believe in this environment, we'll continue to make improvements to both the top and bottom line."
That's fair enough, even if our fickle market hates being effectively told to hurry up and wait for more impressive results down the road. But while I applaud Sanmina's focus on the long-term health and direction of the company, it's no surprise to see shares trading down Tuesday given its underwhelming outlook.