Parts Paucity to Hit Solectron

Electronic News, May 8, 2000 by Carol Haber

Solectron Corp. pre-dicted net sales for the third quarter ending May 26 in the range of $3.4 billion to $3.5 billion, on target with Wall Street's expectations, but earnings per share of 20 cents to 22 cents may fall short of analysts' estimates of 22 cents per share. Solectron cited parts shortages and the delayed closing of certain transactions with Nortel Networks, notwithstanding market demand "that continues to be strong from almost every market segment." Third-quarter results "may be impacted by supply disruptions resulting from certain component shortages and changes in product configuration requirements by certain OEM customers," said Susan Wang, senior vice president and chief financial officer. Solectron isn't alone in its travails. Component shortages throughout the industry are worsening with more parts going on allocation just as consumer OEMs and their contract manufacturers prepare to churn out products for the coming Christmas season, it has been said. Despite the predicament, Solectron is comfortable with year-end Wall Street estimates of 84 cents per diluted share (prior to nonrecurring charges). Its full fiscal year ends Aug. 25.

Motorola Funds Incubator

Motorola Inc. made a strategic minority equity investment in CommLaunch Ventures LP, a privately held Jerusalem, Israel-based incubator fund focused on high-growth Internet infrastructure companies developing products and technologies. CommLaunch is one of three high-tech incubator funds of Jerusalem Global Innovation Centers (JGIC). Motorola participated in CommLaunch's second closing; bringing total financing for CommLaunch to nearly $70 million. Separately, Motorola stockholders approved an increase in authorized shares of common stock from 1.4 billion to 4.2 billion, paving the way for a three-for-one stock split in the form of a stock dividend to be distributed June 1 to stockholders of record as of May 15.

Photonics Funding

Network Photonics, Boulder, Colo., a next-generation optical networking company, said that New Enterprise Associates and U.S. Venture Partners, two Silicon Valley venture capital firms, joined forces to provide a first-round investment of $10 million for the company. Network Photonics is developing all-optical networking products that enable the delivery of gigabit-level data services and alleviate the growing gap between gigabit enterprise networks and terabit fiber optic backbones, it said. Steve Georgis, president and chairman, was a co-founder of Exabyte Corp.

Amphenol Readies Offer

Amphenol Corp., Walling ford, Conn., filed with the Securities and Exchange Commission for a proposed secondary offering of 600,000 common shares. Selling stockholders include affiliates of Kohlberg Kravis Roberts & Co. LP and certain members of management. Amphenol, a specialist in connectors, cable, and interconnect systems, is not selling shares in the offering. After the offering, and assuming an over-allotment option is not exercised, KKR Associates LP will own at least 20.3 million shares of Amphenol, about 49 percent of its common stock and about 77 percent of KKR's pre-offering stake.