Shares of Sanmina (NASDAQ:SANM) fell as much as 14.6% on Tuesday morning. The stock started to recover from that trough at 9:42 a.m. EDT, and was trading down by 8.2% as of 11:45 a.m. EDT.
The designer and manufacturer of printed circuit boards and other advanced electronics components reported third-quarter earnings on Monday night, and the results fell short of Wall Street's expectations. Earnings rose 17% year over year, to $0.74 per share, but analysts were looking for $0.75 per share. Revenues increased 2.4%, to $1.71 billion, but the Street was looking for a 4.2% increase. Management's guidance targets for the fourth quarter also landed just short of current analyst expectations.
Sanmina's earnings came in a bit low due to one-time start-up costs for several new products, which actually is a pretty nice problem to have when you're a contract manufacturer always on the hunt for new customer contracts. Hence, the company's medium-term future looks good here.
"Overall, our program wins and geographic diversification positions us very well for the future," said Sanmina CFO Bob Eulau on the earnings call. "We have accomplished a lot in the last few years and we believe that we can accomplish even more in the next few years."
On that note, this was Bob Eulau's last call as Sanmina's CFO. He will take the CEO office instead, effective October 2. Sanmina founder and current CEO Jure Sola will drop back to focus on his role as the company's executive chairman. Management changes can be tricky, but Eulau's eight years of CFO service should pave the way to a smooth transition.
Even after today's swift haircut, Sanmina investors are still enjoying a 33% gain over the last 52 weeks and a terrific five-year return of 420%. This is nothing more than a profit-taking correction.