Solectron, which makes electronics equipment for brand-name companies, said Thursday it’s cutting 1,400 jobs and reducing its manufacturing operations as part of an on-going restructuring effort.

, which makes electronics equipment for brand-name companies, said Thursday it’s cutting 1,400 jobs and reducing its manufacturing operations as part of an on-going restructuring effort.

The Milpitas, California, company announced the latest restructuring plan after posting impressive earnings for its fourth fiscal quarter, which ended August 31. Solectron reported sales of $2.90 billion, up 21 percent from a year ago. Its net income more than tripled, reaching $38.8 million, or $0.04 per share, from $11.8 million, or a penny per share.

Despite the growth, Solectron, the world’s fourth-largest electronics contract producer, must continue to struggle in a competitive market where its rivals are growing at an even faster pace.

Consider this: Solectron’s revenue declined by 10 percent in 2005 from 2004, while the world’s largest contract manufacturer, Foxconn, saw its sales shoot up by 62.4 percent to $27.3 billion.

Solectron’s fiscal 2006 revenue reached $10.56 billion, up merely 1 percent from $10.44 billion for fiscal 2005. Meanwhile, market research firm iSuppli said the global contract manufacturing business is expected to experience a compound annual growth rate of 10 percent through 2010.

New-Contract Woes

Solectron saw one of its main customers, Nortel, giving some of its business to Flextronics of Singapore. It also has had trouble getting new contracts, wrote Morningstar equity analyst Andrew Golomb in research note. “Customers continue to consolidate, which could put Solectron on the losing end of the consolidation,” he wrote.

Flextronics

Investors are not convinced whether Solectron will be able to get out of the slump, especially when the company gave a rather uninspiring forecast for the first fiscal quarter, when it expects to post sales of $2.6 billion to $2.8 billion.

Its shares fell 3.8 percent, or $0.13, to $3.29 per share in after-hour trading.

To spur growth, Solectron will have to win more customers in the booming consumer electronics market. Right now its largest customers include network equipment maker Cisco Systems and Nortel.

Cisco Systems

Foxconn, in contrast, makes iPods for Apple Computer and game consoles for Sony and Nintendo. Foxconn is owned by Taiwan’s Hon Hai Precision Industry, which in June said it would buy digital camera maker Premier Image Technology of Taiwan for $928 million. Contact the writer:UWang@RedHerring.com

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