Sometimes you get more than you asked for. Last night, I dialed in to electronics manufacturer Flextronics' (NASDAQ:FLEX) earnings call, expecting lamentations on the state of the economy. There was a little bit of that, but I also got a history lesson.

Let's get the numbers out of the way first, though (in millions of dollars, where appropriate):


Q2 2008

Q2 2007


Net Sales




GAAP Earnings








Adjusted EPS




You'll see conflicting reports on the company's success, or lack thereof. In GAAP terms, this was an earnings disaster despite awesome sales. But if you back out stock-based compensation and amortized intangibles from both periods, and ignore a $129 million charge for "distressed customer accounts," things are looking up.

The adjusted version is arguably a truer representation of the company's operations, but the tax man only cares about GAAP numbers. I think that the writedowns may be all done, so this could be a one-time charge. But 90% of Flextronics' sales come from its top 75 customers out of a Rolodex some 1,000-names strong. If major customers like Cisco Systems (NASDAQ:CSCO), Microsoft (NASDAQ:MSFT), or Dell (NASDAQ:DELL) struggle, there might be more writedown pain ahead anyway.

OK, now for the history lesson. CEO Mike McNamara compared the current meltdown to the Internet bubble, explaining that the electronics manufacturing industry "does not face the same risks today." Last time, irrational exuberance forced Flextronics and rivals like Sanmina-SCI (NASDAQ:SANM) and Nam Tai (NYSE:NTE) to build out their production capacity just to keep up with demand. This time, "customers have been more disciplined," and the manufacturers have diversified.

"Like many of our competitors," said McNamara, "we have aggressively invested in the business over the last several years while the economy was healthy and we will expect those investments to pay off in the coming quarters."

That sounds like good business sense to me -- invest when times are good to survive the lean years later on. It's kind of the reverse of what the financial industry has been doing. Are you listening, Big Oil?

Class dismissed!

Further Foolishness:

Nam Tai Electronics is a Motley Fool Global Gains selection. Dell and Microsoft are Motley Fool Inside Value picks. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.