I hope no one got the impression from my earlier columns on Solectron (NYSE:SLR) that this electronic manufacturing services provider would enjoy a particularly quick turnaround. While signs of progress are evident, the company is a long way away from operating at its peak efficiency or potential.

While company management said it could have done better, the third-quarter results that it did present were okay. Sales rose 4% from last year (up 8% sequentially), and the company once again made very modest progress on its gross margins. Turning to non-GAAP profits, the company was basically flat with last year, though once again up on a sequential comparison.

Cisco (NASDAQ:CSCO) continues to be a major factor in Solectron's business (about 16% of total revenue), and it continues to be somewhat volatile, since revenue was down a bit sequentially. At the same time, business from Lucent (NYSE:LU) continued to ramp up, and the company saw sequential growth in every segment but networking, with particular strength in consumer and industrial business lines.

Turning to other financial metrics of note, inventory turns declined slightly on a sequential basis. Nevertheless, the cash cycle still improved a bit, as did the level of days sales outstanding.

As we've seen for a while already, this is not the easiest space in which to operate. There's fierce competition for customers, and intense pressure to find the lowest-cost production options without compromising quality and reliability. In addition, there really are no secrets -- areas like consumer goods are known to be attractive, and companies like Solectron would like to get more of this business (at the expense, perhaps, of other manufacturers like Jabil (NYSE:JBL)).

I'm not quite as excited about Solectron's stock as I was a few months ago. I don't dislike the company or think their recovery plans are faltering. It's just that the recent market declines have exposed too many other bargains. When push comes to shove, I'll almost always go with a good company that's been momentarily placed on sale before a turnaround candidate, if the potential rewards seem similar.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).