Electronics giant reports record revenue growth

Solectron, the world's largest contract manufacturer, is one of the first to take a hit as demand for PCs and telecoms equipment falters. It had been a major winner when big names such as Nokia and Nortel bailed out of manufacture late last year.

The company released second quarter figures showing revenue up 85.5 per cent on the same period last year at $5.4bn. Profit was $121.9m, up 26 per cent on the previous year. The figures beat Wall Street expectations.

However, the company warned that third quarter revenue would be down to as low as $4.1bn, and blamed reduction in demand from its customers.

Susan Wang, CFO of Solectron, said: "This is a most unusual period where the markets fell so far and so fast in a few weeks following a period of insatiable demand."

The company anticipates a recovery in the short term, although it is to lay off 8,200 of its 79,000 worldwide employees.

Koichi Nishimura, Solectron chairman, president and CEO, said: "We have been reducing our workforce at many sites. In addition, we will implement a plan to balance our capacity and capabilities as we prepare the organisation for a re-acceleration of growth."

In his last report, Nishimura predicted that the company would benefit from the slowdown as its customers came under pressure to cut their expenses and prices.

Solectron has just completed the takeover of Singapore contract manufacturer NatSteel Electronics in a $2.4bn deal. Within the last three years it has taken over Sony and Nortel factories and a number of other contract electronics manufacturers