Warren Ligan - Senior Vice President, Treasury & Investor Relations Paul Read - Chief Financial Officer Michael McNamara - Chief Executive Officer

Jim Suva - Citi Sheri Scribner - Deutsche Bank Alexander Blanton - Ingalls & Snyder Brian White - Collins Stewart William Stein - Credit Suisse Sean Hannan - Needham & Company Amit Daryanani - RBC Capital Markets Shawn Harrison - Longbow Research Louis Miscioscia - Brigantine Advisors

Good afternoon, and welcome to the Flextronics International Fourth Quarter Fiscal Year 2009 Earnings Conference Call. Today's call is being recorded, and all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Warren Ligan, Flextronics' Senior Vice President, Investor Relations and Treasury. Sir, you may begin.

Thank you, operator. Good afternoon and welcome to Flextronics' conference call to discuss the results of our fiscal fourth quarter ended March 31st, 2009. On the call today is our Chief Executive Officer, Mike McNamara, and our Chief Financial Officer, Paul Read. Presentation that corresponds to our comments today is posted on the Investors section of our Web site under Calls and Presentations. We will refer to each slide number so you can click to the appropriate slide. During the call today, Paul will review our financial results. Mike will comment on the quarter and business outlook and provide guidance for the first quarter ending July 3rd, 2009. After Mike's comments, we'll take your questions. Please turn to slide two. This presentation contains forward-looking statements within the meaning of the U.S. Securities Laws, including statements related to revenue and earnings guidance, our expectations about our future operating margin, conversion cycle, inventory management, liquidity and capital structure. The expected changes in savings associated with our restructuring activities, and our expectations regarding end market demand for our products and our business in the current economic environment. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these statements; are based on our current expectations; and we assume no obligation to update them. Information about these risks is noted in the earnings press release on slide 18 of this presentation, and in the risk factors and MD&A sections of our latest annual report, as filed, amended with the SEC, as well as in our other SEC filings. Investors are cautioned not to place undue reliance on these forward-looking statements. Throughout this conference call, we will reference both GAAP and non-GAAP financial measures. Please refer to the schedules to the earnings press release, on slides 8 and 9 of this presentation, and the GAAP versus non-GAAP reconciliation in the Investors section of our website, which contain the reconciliation to the most directly comparable GAAP results. I will now turn the call over to Paul.

Thanks Warren. Good afternoon everyone. Please turn to slide 3 in the presentation. Our fourth quarter revenue was 5.6 billion, which came in at the low end of our guidance range and represented a decrease of 28% year-over-year. The end market demand weakness we experienced at the end of the December continued into the March quarter. Adjusted operating profit was 51 million compared to 263 million last year, which was a decrease of $0.81 and adjusted net income for the fourth quarter was 22 million compared to 215 million a year ago. Adjusted tax expense for the quarter was a credit of 18 million due to a number of items including lower than estimated taxable income for the year in certain jurisdictions and some tax benefits from the disposition of several phone companies during the year. Adjusted earnings per diluted share was $0.03 which came in at the low end of our guidance range and represented a decrease of 88% year-over-year. Our fiscal year 2009 revenue was 30.9 billion. Adjusted operating profit was 811 million. Adjusted net income was 605 million, and adjusted earnings per diluted share was $0.74. These results clearly reflect the macro-economic environment that has contributed to unprecedented end market demand deterioration which accelerated in the latter half of the fiscal year. Please turn to slide 4. Here we show each market segment's quarterly revenue and percent of total quarterly revenue trended for the past five quarters. Revenue for the Infrastructure segment was 1.9 billion which comprised 33% of total revenue and decreased 33%, over the year ago quarter. We saw demand weakness across each of the product categories we support as well as each of our major customers in the segment. Most notably, our revenues with Nortel continued to decline to 244 million for the quarter, reflected our planned reductions in business levels coupled with the impact of the bankruptcy process. While the Infrastructure segment experienced significant demand weakness, we're still confident in our broad offering and ability to maintain market share. Revenue from the Computing segment was 1 billion which comprised 18% of total March quarterly revenue and decreased 24% over the year ago quarter. We witnessed significant demand erosion across almost every customer in our portfolio, which was expected given the decline in IT spending and the duplication in PC demand during the latter part of the fiscal year. Offsetting these negative impacts was the initial ramping of several notebook wins that we previously announced. Revenue from the Mobile segment was 1.1 billion, which comprised 20% of total revenue and decreased 22% over the year ago quarter. The global demand deterioration for mobile devices clearly impacted our results. However, our portfolio has been bolstered by new program wins with several new customers. One of those new customers, RIM, had quickly become one of our top 10 customers. Revenue from the Consumer Digital segment was 714 million, which comprised 13% of total revenue and decreased 29% over the year ago quarter. Weak consumer demand has significantly impacted this segment of our business as volume declined across most of our product offering. The slowing economy contributed to the large post-holiday inventory build that affected our main customers. Contributing a degree of stability to our revenues on a year-over-year basis was our penetration into the LCD TV space. Finally, our Industrial, Medical, Automotive and other category comprised 16% of our fourth quarter revenue and decreased 28% over the year ago quarter. We continue to broaden the available markets by expanding product categories in this new segment, such as solar, self-service and disposable medical devices. However, the macro environment has weighed heavily on demand trends across all the product categories and geographies in this segment. End market demands remain very challenged as evidenced by the sequential and year-over-year quarterly revenue tend. The deteriorating demand environment accelerated during the December quarter and continued through the March quarter, reflecting the weak global economy. We were encouraged by signs of stabilization in the March month, within some regions of the market we serve. However, it is too early to be sure of longer term stabilization, and we anticipate challenging industry condition continue into fiscal 2010. The significant breadth and depth of our service offering and our extensive diversification of strategic advantages that we believe position us to capture market growth opportunities, once the global demand picture improves. Please turn to slide 5. This slide demonstrates the continued trend of diversifying our customer base as we expand available market and product category. In the March quarter, top 10 customers accounted for approximately 46% of the total revenue. No customer accounted for more than 10% of revenue during the quarter. And we know that Sony Ericsson is no longer our largest customer. We're pleased with the progress of this trend and lack (ph) of significant dependence on any one customer to be a strategic advantage. Please turn to slide 6. Adjusted gross margin of 4.2% and adjusted operating margin of 0.9% decreased 200 basis points and 250 basis points respectively, from the year ago quarter. Despite the restructuring and cost reduction effort, the substantial decline in sales drove significant margin erosion. We experienced substantial under absorbed overhead costs as a result of capacity utilization issues created by the large decline in revenue. Risk action on our part to implement those restructuring plans was partially muted by the speed and degree of the drop in demand. Please turn to slide 7. Adjusted selling, general, and administrative expenses, which include research and development costs, totaled 185 million in the fourth quarter ended March 31st, 2009 compared to 212 million in the third quarter ended December 31st 2008, representing a 13% decrease sequentially. Our quarterly adjusted SG&A hasn't been less than 200 million since the September quarter of calendar 2007, which was prior to Solectron acquisition. As a percentage of revenue, adjusted SG&A was 3.3% in the March quarter. As discussed in our last quarter call, we've established clear action plans to drive reductions in our discretionary spending and align our cost structure with the prospective business levels. There is a lag in the realization of our actions on the cost structure and related operating margin. But we anticipate there will be an improvement in our operating margins going forward as a result of our actions and as the economic environment improves. Please turn to slide 8. During the March quarter, the company recognized pre-tax restructuring charges of 151 million and 74 million in payment charge related to the reduction in the estimated recoverability of certain notes receivable. Also during the March quarter, the company recognized after-tax intangible amortization and stock-based compensation of approximately 25 million and 9 million respectively, compared to 59 million and 15 million respectively in year ago quarter. The decline in intangible amortization is due to the realization in the prior year quarter of a one-time write-off of certainly intangible assets. After reflecting these items, the GAAP loss was 240 million compared to the GAAP loss of 93 million in the year ago quarter. GAAP loss per share for the March quarter was $0.30. Please turn to slide 9. Fiscal year 2009 GAAP results reflect many non-cash charges, including the impairment of non-core assets, distressed customer charges and impairment charge of 5.9 billion to write-off the carrying value of recorded goodwill. The company also recognized a gain of 28 million associated with these things on 260 million of our 1% convertible notes. After reflecting all items, the GAAP loss for the fiscal year 2009 was $7.41. Please turn to slide 10. As revenue visibility improved during the quarter, we acted promptly to rationalize our global manufacturing capacity and infrastructure to meet the current demand. On March 10, 2009, we announced a restructuring plan intended to improve our operational efficiency by reducing excess workforce and capacity while shifting manufacturing to other locations to achieve higher efficiencies and in most instances, lower costs. The objective is to restart our business in order to return to more normalized operating margins as quickly as possible. Our restructuring costs are primarily related to employees' severance which is the most immediate impact on margin. Other restructuring costs are related to the disposal of non-essential buildings and equipment plus other costs associated with the exit of certain contractual arrangement due to facility closures. In the March quarter, total charges related to restructuring were approximately 651 million, which consists of 95 million in cash charges and 56 million in non-cash charges. Approximately 86% of the restructuring costs were included in cost of sales. We do not see any significant changes to our original plans and expect the majority of the remaining 70 to 100 million of the associated charges to be realized in our June quarter, with any residual amounts to be recognized in our September and December quarter. We remain confident that upon completion of these restructuring activities of potential savings will lead annualized savings between 230 and 260 million. We expect to achieve savings from cost of sales through lower depreciation, reduced employee expenses, reduced operating costs and improved operational efficiencies as well as reduced SG&A operating expenses. Please turn to slide 11. Our cash conversion cycle was 22 days in the March quarter, which was a three day improvement over the prior year period, on a sequential basis increased by four days. This trend is typical for our fourth quarter which has historically increased by three to four days. We believe that our cash cycle of approximately 20 days going forward is the reasonable target in this environment. We're extremely pleased with our inventory management, which is reflected in the reduction in inventories by more than 1.1 billion in the March quarter compared to one year ago. Days sales outstanding increased by 1 day to 43 days while days payable outstanding increased by 6 days to 76 days when compared to the year ago period. These two metrics in this period are somewhat misleading especially with the 32% sequential drop in revenue. On a more normalized basis, DSO would have been 35 days with DPO 68 days. The company has successfully generated healthy cash flows by focusing on rapidly reducing working capital during a period of end market volatility. Please turn to slide 12. We remain strategically focused on building liquidity by improving our working capital management. During the past two quarters, revenues decrease 37% and we have aggressively reduced inventory levels by approximately 1.5 billion or 34%. In the December quarter, we decreased revenue by more than $1 billion. We continued this effort in the March quarter which resulted in the further decrease of more than 500 million. However, due to the severity of revenue decrease, our inventory turns declined to 6.6 turns in the March quarter compared to 7.7 turns in December quarter. We expect to achieve more normalized inventory turns in the June quarter. Please turn to slide 13. Our cash flow from operating activities generated 286 million in the quarter as we significantly reduced our net working capital, resulting from lower inventory balances and strong reductions in outstanding accounts receivable despite realizing a reduced benefit from receivable sales in excess of $200 million. Our cash flow from operations also reflected the absorption of approximately 76 million of restructuring related payments during the quarter. This brings our cash flow from operations for fiscal year 2009 to approximately $1.3 billion. Net capital expenditures were 89 million and total depreciation and amortization were 129 million in the March quarter. Our modest capital spending during the quarter combined with strong cash generation resulted in approximately 197 million of free cash flow. We are pleased with our ability to reduce working capital, capital expenditures, acquisitions, other discretionary spend to generating free cash flow for the fiscal 2009 totaling 855 million, which exceeded our target fiscal year level of 800 million. During the March quarter, we used 200 million to fully pay down our revolver providing capacity of $2 billion. For the year, we deployed over 600 million of cash on financing related activities as we successfully tendered for the repurchase of 260 million of our outstanding 1% convertible notes at a meaningful discount to par. We also purchased approximately 30 million ordinary shares at 260 million to reduce our other bank borrowings by approximately 173 million. Please turn to slide 14. At the end of the March quarter, we had approximately 1.8 billion in cash, which was essentially flat compared to the end of the December quarter. As a result of the 200 million pay-down of our revolver, total debt was 2.97 billion at quarter end compared to 3.17 billion in the December quarter. Net debt, which is total debt less total cash, was 1.1 billion at March quarter end, down from 1.38 billion at December quarter end and down 550 million from one year ago. We closed fiscal 2009 with no borrowings outstanding under our revolving credit facility and are comfortably within the limits of our most restrictive financial covenants. Our total liquidity defined as available cash plus our undrawn revolving credit facility improved to 3.8 billion in the March quarter compared to 3.6 billion in the December quarter. We believe we've built ample liquidity to support our business. The graph at the bottom of the slide shows our significant debt maturities by year. The first maturity is dye in July of this year which is our 195 million privately placed convertible junior subordinated notes. The second maturity is due in August 2010, which is 240 million of 1% convertible notes. No additional significant balances of debt are due until calendar 2012. Based on our existing cash balances along with our anticipated cash flows from operations and the additional liquidity available under our revolving credit facility, we remain extremely comfortable that we have sufficient liquidity to meet our needs. Thank you ladies and gentlemen. As you turn to slide 15, I will now turn the call over to our CEO, Mike McNamara.

Thanks Paul. I would like to now provide some comments on the results of our quarter and fiscal year-ended March 31st, 2009 and provide some insight into the current industry and the market trends. Fiscal 2009 was comprised of two drastically different halves. Our first half of fiscal 2009 reflected the continued strong operating performance that was achieved in fiscal 2008 as we met or exceeded our financial commitments and established many financial records. The first two quarters also reflected record revenues and adjusted operating profits as our organic pipeline continued to offset some sluggishness in orders from existing customers. The September quarter was our 10th straight quarter of year-over-year adjusted EPS growth. Our scale, geographic diversification and product diversification provided us with competitive advantages that drove the continuous growth. Because of the recent global economic crisis, the record breaking achievements during the first half of fiscal year 2009 were followed by a very challenging second half. Our operational performance in the second half of fiscal 2009 reflected the detrimental impact of the global economic crisis and the resulting effect that had on customer demand. Our revenues and adjusted operating income were down 20% and 59% respectively for the second half of fiscal 2009 as compared to the first half. The weakened worldwide economy has had a significant impact on our business. Almost every product category and every geographic region we operate in has sustained a substantial reduction in demand. Last quarter I mentioned that the deteriorating demand environment had accelerated and this trend continued through most of the March quarter. Our March quarter revenues amounted to 5.6 billion and our adjusted diluted earnings per share were $0.03, both of which came at the lower end of the guidance range. These results are a direct reflection of the very challenging environment we are operating in, which was exasperated by the deterioration in demand in one of our large cell phone customers and a large telecom infrastructure customer. In response to this challenging market environment, we've been adjusting our operations and continuing our focus on the controllable aspects of our business. As previously discussed, our top priorities in this environment are to control costs, improve internal efficiencies, reduce inventory levels, aggressively manage our working capital, generate strong cash flow and improve our capital structure. Additionally, we are adjusting our offering scale in order to return to normalized levels of profitability. And in that regard, I'm extremely pleased with our execution this past quarter on several of the controllable aspects of our business. For example, we reduced inventory by over $500 million sequentially. Even more impressive in the last six months, we have reduced inventory by over 1.5 billion. We view this result in particular to be outstanding. We successfully generated 197 million of free cash flow for the quarter in spite of a reduction of approximately 200 million of AR sales. And we've generated 855 million of free cash flow for the full year. We further strengthened our capital structure with additional reductions in net debt this quarter, up 229 million, bringing our net debt to approximately 1.1 billion which is down almost $550 million for the full year. We continue to keep our capital spending below current depreciation level. We reduced our SG&A sequentially by 27 million which was our lowest level since September of 2007. And we implemented the restructuring actions necessary to achieve profitability at lower revenue levels. We continue to maintain strict cost controls across the entire business and are executing very well on these controllable aspects of our business. This will continue to be a focus for us as global economic uncertainty remains. Next, I would like to comment on each of our end markets, provide you with more color on how we see the business evolving during this difficult market condition. Infrastructure, we are extremely pleased with the competitive position of our Infrastructure business. While we have a well diversified portfolio and are strategically aligned with our key customers, this segment has not been immune to the worsening (ph) demand environment. Additionally, our revenues in the segment have been negatively impacted by the reduction in Nortel revenue, which has been significantly reduced -- as that business walks its way through the bankruptcy process. While we anticipate the challenging industry conditions will continue, there are pockets of strengthening demand, such as with the continued China 3G expansion. And we are very pleased with encouraging number of new business opportunities that continue to present themselves. In Computing, there are now really two parts of our business, the traditional EMS high-end computing business and the ODM business dominated by notebooks. The EMS portion of the business has been experiencing the predictable slide similar to the other segments. However the notebook business is on plan. As we are ramping our volume of HP notebooks that started last month and we expect this segment to be a significant revenue growth engine as the year develops. The ramp is mostly upside, so the economic slowdown has had little impact. In Medical market we serve has been challenging, but we have been successful in sustaining only marginal reductions in this business. Our long-term initiatives continue to work well, and we continue to see very positive customer interest in our broad platforms of Medical services. During the recent quarter, we were awarded preferred supplier status by several new top-tier medical customers. And we remain confident that our broad service offering is exceptionally positioned to capitalize on the increased outsourcing opportunities developing within the space. We are hopeful that this will be a growth business for us this year. Our Industrial business encompasses the diverse side of market sub-segments, including capital equipment, meters and controls, test equipment, solar products, appliances, self-service, kiosk and other miscellaneous products. All of the product markets we serve have been impacted by this tough economic environment with some significant market contraction. However, we expect these industries to increase outsourcing as a strategy over the next couple years and believe our strengthening vertical capabilities and breadth of our services in this segment will enable us to win more new business opportunities. While difficult at the moment, we are quite optimistic about the segment and continue to add many new customers in these newly developing markets. The Consumer market continues to face significant macroeconomic headwinds as we discussed last quarter and every segment every sector of the Consumer market we serve has experienced natural demand erosion. This is reflected in the 56% sequential reduction in our revenues for this segment. While there are some indications that we may be nearing a bottom we continue to be cautious with our outlook. On a positive note, I would highlight that we have started to see some new opportunities with some Japanese customers and have some new wins with LCD TV. The performance of our Mobile offering has merited (ph) that of the overall Mobile device market, which has been experiencing an exceptionally challenging macro environment. This is a deceleration of demand in the December quarter followed by channel inventory corrections throughout this past quarter. We believe that difficult industry conditions will continue as the global economy remains weak. Flextronics specifically has also been hampered by significantly reduced demand from one of our core mobile customers. To combat these negative trends, we continue to make solid progress with new mobile customers focusing on opportunities within the smart phone space in emerging markets. Our relationship with a major smart phone manufacturer continues to strengthen and we are in production in multiple geographies. Our perspective on the automotive market can be somewhat misleading as our business is primarily focused on ODM products for European customers. While we believe that opportunities to grow this business remain strong, as the electronic content in cars continues to increase, there are clearly challenges for many OEMs in this space. This business currently represents less than 2% of our revenues, and we will continue to focus on ODM products with financially starved customers going forward. Overall, we are encouraged by what we are seeing in sub-segments of our business as there has been indications of stabilization. Our most recent forecast cycle and the revenue trends over the past several weeks have demonstrated to us that the massive deterioration we had been experiencing has subsided and has at least for now stabilized. Alternatively, we do not see signs of a recovery and therefore we will be managing our business at the levels we have today with possibly some modest seasonal upside as we head into the end of the calendar year. Clearly the worldwide economic situation continues to drive a high level degree of uncertainty around demand, and it will take sometime for this to alleviate. So while there are signs of stabilization in some of our end-markets, we remain cautious yet optimistic as a sense of firmness appears to be returning to many of our customers. Slide 16, turning to guidance, we expect our June quarter revenue to be between 5 and 6 billion, which is essentially flat to Q4 and adjusted earnings per share to be in the range of 4 to $0.08 per share. The current uncertainty and global economic conditions make it very difficult to forecast demand and related financial impacts across the markets we serve. Our guidance reflects the challenging demand environment and some of the benefits of the actions we have taken to control costs and restructure our business. Quarterly GAAP earnings per diluted share are expected to be lower than guidance provided herein by approximately $0.15 for intangible amortization expense, stock-based compensation expense, non-cash interest expense and estimated restructuring costs. Please turn to slide 17. Before opening up the call to question-and-answer session I would like to thank our employees for the sacrifices they have made and continue to make to further our controls on our discretionary spend. I am extremely proud of their dedication, execution in this very challenging environment for the company. I would also highlight some key takeaways. The overall environment has presented many challenges and has required us to revisit how we operate and structure our business, and evaluate the types of products and programs we engage in. And while this has been a demanding time, we have gained a deeper appreciation to the strategy we are setting and our competitive strength. We continue to take necessary steps to fortify our balance sheet, our capital structure and maintain our focus on generating solid cash flow. We believe that our existing cash balances, together with anticipated cash flows from operations and our availability under revolving credit facility are more than sufficient to fund our operations and support our business opportunity. We have a deliberate consistent strategy to achieve product, geographic and vertical capabilities diversification. We have concentrated our strategy with market-focused expertise and capabilities and believe our key competitive strengths, including our low-cost industrial park concept, vertically integrated end-to-end solutions, significant scale, customer and end market diversification and long standing customer relationships will enhance our competitive position and allow us to capitalize on the numerous opportunities being created in these uncertain times. In closing, we are as confident as ever that our strategy and organizational structure are intact and very appropriate. We believe our management team has vast experience in dealing with the challenging demand environment and has the fortitude to carryout the appropriate measures needed to adjust to challenges we're facing. We are confident that we will emerge from this downturn as a healthier, financially stronger and a leaner company, both for future growth and profitability. I will now turn the conference call over to the operator for questions. We ask that you please limit yourself to one question and one follow-up.

Thank you. At this time, we are ready for the question-answer session. (Operator Instructions). Our first question comes from Jim Suva with Citi. Sir, your line is open. Jim Suva - Citi: Hi, Mike and Paul. This is Jim Suva from Citi. A quick question, you mentioned that EPS came in at the low end of your guidance. And if my math is correct, it looks like you got about a $18 million tax benefit, which would actually put EPS closer towards breakeven and below your guidance. Or do you believe that your guidance somehow included a tax benefit, which I don't think many of us got in our models? And also in your outlook then should we anticipate some other type of tax benefit coming through?

Hey Jim, it's Paul. Pretty correct, roughly the tax benefit was around $0.02, so our guidance EPS guidance for $0.03 includes the tax line of course, and therefore anything that we pick up on that line, we take credit for, going forward of course, some of these one time credits that we won't be getting, and the I think the operating tax rate is roughly 10 to 15% on a go forward basis. Jim Suva - Citi: Okay and then you have a note receivable write-off or what was the call theory, yeah no receivable impairment. Can you give us some details on what that was?

Yeah sure, we have a note from a previous spin-off that we made a few years back. And we've been paid down to what we consider would be fair value and that's based on what we estimate to be the recoverable value of that investment. Jim Suva - Citi: And that's the huge KKR transaction I assume?

No, no it's not that. It's another one. But, I don't want give details but it's not that. Jim Suva - Citi: Okay, after that, may be just a quick general question for Mike. Mike in this environment where demand uncertainty is very unclear and the outsourcing model tends to go through different phases, are you saying right now OEMs kind of in a bit of freeze mode or are they actually reaching out to do more outsourcing, because it seems like the demand and the drop-off in the revenues look like that the outsourcing model right now is in little bit of a stalled mode or maybe I'm just often thinking about it a little too negatively.

Yeah, I don't know that it's as much in a stalled mode as there's just not a lot of there's just a lot less business available today. I think the first reaction I think you pointed out in some of your previous communications is that the first reaction of the OEMs in the downturn is whatever internal capacity they have is to go fill that up. I think that was accelerated a little bit this downturn because the demand drop was so severe that they had to fill up the capacity that they lost as well as what was -- so I think that was the first step and I think we've gone through that period. I think that been a occurring over the last six months. And I actually don't anticipate more of that. So, I think that's pretty much subsided but the amount of new business coming out is just limited because still the volumes are down pretty substantially as evidenced by the GDP announcement that was made just today. So, I think the process of bringing the backend, I would guess if you want to talk about the cycle is over, is pretty much over to me. I think that's already been done. And I think the go forward model is going to be built around what additional revenue and business the OEM has. What normally happens in this cycle is the first reaction to fill up the internal capacity and the second reaction is that once but keep in mind all these companies are stuck with this fixed capacity. And there is a new activity when we come out of this, where the OEMs will say to themselves that I really want to keep all that fixed capacity around and recognize it as an opportunity that helps to go start reducing that fixed capacity and turning their manufacturing capacity in to variable. So I think we haven't large uptick in the cycle yet, but we will. It's happened every other time and but I think we're kind of the activity to bring work back in the kind of mostly slowed, I think the activity to send it out has not occurred yet. And I will just be patient and believe overtime that, that it will come back. So I don't think the model is upside down. I just think those lots of less business out there. And I think we're -- might get in the backend to that cycle. Jim Suva - Citi: Great. Thank you very much Mike and Paul.

Our next question comes from Sheri Scribner with Deutsche Bank. Your line is open. Sheri Scribner - Deutsche Bank: Hi. Thank you. If I look at your revenue guidance in the past couple of quarters, this has been the case but the range is pretty big, it's a $1 billion range. Is there some conservatism in that number and as we go forward into the second calendar half of the year, do you expect revenues to pick up as it would seasonally pick up. I know you said things will stabilize, but you're not yet seeing a recovery. And I guess an essence with the range that you're giving get a little bit tighter?

I think the range will get tighter as we get more confidence into what the market is going we don't know what the market conditions are. So, I think until that happens, we're going to have a pretty broad range. And the go forward periodic comments, is that they're going to get stronger towards to the end. Having a flat quarter-on-quarter result is actually somewhat of a positive news for us and we've been in a situation where we went through about five straight months of just rapidly decelerating business, and that seems to be bedded a little bit. As I mentioned it has stabilized a little bit over the last several weeks. So just going from our March quarter to June quarter with a pretty stable flat outlook, we consider to be kind of positive, because this is the first time we're seeing any kind of stability. So whether or not, that will hold we don't know, but how we're going to run the business is that, that is our new baseline. We'll expect some seasonal uptakes later in the year as we get into September and December, which I think are pretty normal, but view those as modest. So we're going to run the business, as if there is modest seasonal uptakes going forward. But, we're going to try to figure out, how to go make our full profitability based on these levels. Sheri Scribner - Deutsche Bank: Okay. And then in terms of the inventory numbers, you had on an absolute basis inventory improved this quarter. Do you expect the -- on an absolute basis for inventory levels to come down again in the June quarter?

If they do, it will be modest. Sheri Scribner - Deutsche Bank: Okay, so maybe flattish?

Yeah. So if you look at the total revenue that we that went down -- we went down over the last two quarters which I consider to be the period of distress here. Our revenues went down 37%, and our inventory went down 33%. So in fact, we've actually matched inventory reductions pretty nicely with the reduction in revenues. So if you think about it, we plan -- and if you look at like kind of a normalized inventory turns, we would expect this June to be running inventories very similar inventory turns very similar to last June which was kind of a normal environment. So we think we already are back to a little bit normal. The inventory turns is kind of deceptive. It looks like we have some work to do because of the 6.6. But the reality is if you take out the big swings of the beginning a quarter, end of the quarter, the big swings in the cost of sales there, it ends up being a pretty good inventory level that we're at today. So I would expect modest changes as opposed to any kind of significant step-function. Sheri Scribner - Deutsche Bank: Okay, thank you. And thank you for the detail on the segment demand. Thanks.

Our next question comes from Alex Blanton with Ingalls & Snyder. Your line is open. Alexander Blanton - Ingalls & Snyder: Thank you. I have couple of I think it was last week, there was a report, out of Poland that you are going to open or expand your logistic center in lots and add 250 employees to logistic center by the end of 2010. And of course, that is located where Dell has their large plant. And the Dell plant is going to reportedly about double its production because the Limerick production that Dell has is going to transfer this year to that plant in Poland. So, is there a connection between the expansion of your logistics operation there and the expansion of the Dell production in that plant? And will you be participating -- I mean when they announced this, Dell said they were going to shift some of that production to contract manufacturers in Eastern Europe from Ireland?

Yes, so the logistics operation is -- an operation that is a warehousing and logistics operation that in part supports that entire Dell production facility. Alexander Blanton - Ingalls & Snyder: That's right.

We also support the facility in Limerick. So, as that production moves from Limerick over to Poland for Dell when they do the final assembly, we would expect to have an equivalent and corresponding increase in activity as we support that operation. So we do expect our Limerick activities supporting Dell to go down over the next few quarters. And we expect our Poland operations supporting Dell to go up over the next few quarters. So there is it's very correlated. Does that answer the question? Alexander Blanton - Ingalls & Snyder: Well, will that include doing some of the actual assembly of the computers?

Well I think at this point Dell's currently going to -- it's planning on doing that in their own operation. And if that changes, I'm sure that they'll let us know. But at this point we're supporting distribution and warehousing activities directly, and that's it. Alexander Blanton - Ingalls & Snyder: All right. And on that topic, can you give us an idea of what kind of magnitudes you are looking at in the notebook business? You mentioned that you started to ramp HP business in March, but that couldn't have been very big. But where is it going this year?

Well we would it's a little bit hard to say we're ramping. But we would be pretty disappointed if by the end of this year, we were not running at a run rate of 1.5 to $2 billion, just for notebook. Alexander Blanton - Ingalls & Snyder: Okay.

Relative to last year a good -- four or five times increase. Alexander Blanton - Ingalls & Snyder: And is that all for HP or for all customers?

Yeah, that will be all the customers. Alexander Blanton - Ingalls & Snyder: Final question.

It is the biggest. Alexander Blanton - Ingalls & Snyder: That's good detail. Final question is on share repurchase. You had a bond issue that -- your impairment charges triggered a provision there that prevented you from buying your own stock. Has there been any change in that situation?

No Alex, it's still the same. Alexander Blanton - Ingalls & Snyder: You didn't get a waiver?

No. Alexander Blanton - Ingalls & Snyder: Okay, thank you.

Our next question comes from Brian White with Collins Stewart. Your line is open. Brian White - Collins Stewart: Just - Paul on the restructuring, when we're through with the restructuring charges here, what will the breakeven level be for the company?

Well breakeven level, this is heavily mix dependant. The difficulty -- specifically, we have so many different businesses in this on this, so equally weighing as you know from the mix. So you consider this quarter, it could be considered the breakeven quarter at this revenue level. So it's our anticipation to just improve that margin profile with the restructuring efforts that we're making and realize those savings that we've quoted at a full run rate towards the back-end of the year. Brian White - Collins Stewart: Okay. So it might be closer to 5 billion or over about 5 billion.

It's going to be lower than it is today? Brian White - Collins Stewart: Okay. And when we think about the notebook business, this was a big ramp, what impact will this on the margin?

Well near term it will improve them. One of the things that we're experiencing as relates to bringing up the notebook business is that we had pretty good demand on our design resources, so we've been expensing those design resources. So the notebook business so far has been a drag on earnings with very, very little revenue offsetting it. So, so far it's been an investment period for us. As it ramps up, even with minimal earnings and profitability it will absorb a lot of those initial expenses. So near term we would expect it to improve quite nicely and then and -- which is unnecessarily incremental earnings but it's kind of reduction in losses if you will, because the investment period will now be the investment dollars will now be absorbed by ongoing production. But going forward we anticipate -- it's a little too early to say but we certainly anticipate running at industry standard kind of margin levels and at velocity levels that we see in the other OEMs. Brian White - Collins Stewart: And what would that be?

Anywhere from 1.5 to 2.5% with very, very little working capital. Brian White - Collins Stewart: Okay. Just finally mobile phones, in the June quarter do you think mobile phones will go down sequentially?

June, mobile phones going up sequentially. I don't their display, I mean there may be a slight decrease but pretty close to current levels. So it could go down a little bit, but it's a modest change. Brian White - Collins Stewart: Okay. Thank you.

It will get pretty flat. Brian White - Collins Stewart: Thanks.

Our next question comes from William Stein with Suisse. Sir, your line is open. William Stein - Credit Suisse: Hi, it is Credit Suisse, thanks. I am wondering if you guys could discuss the performance in the components businesses. I would have imagined at this lower level sales in particular on the handset side, where I think you're more concentrated on, the vertical integration that was discounting margins more, can you discus that business with us?

Yes. So I can kind of walk through kind of the main pieces. So the biggest one is the printed circuit board business, that's been -- I would call it more severely affected. The component businesses are going to go down and react more dramatically to a downturn than like our systems integration business which more reflects end market demand. So that's been down significantly. We are starting to see a recovery in that. We believe that the March quarter will be the low. And then what we see today is that we'll see continuous increases in revenue in that business for the next two, three, four quarters. So, we actually have hopes that the printed circuit board in this business overall, FY10 relative to FY09 will actually be pretty flat. So we're actually hoping -- we think we're at the bottom, the inventory adjustment period is over and we think we should start seeing that go up. So lets then and that's had a corresponding drop in profitability as you would expect. So we also expect profitability in the start moving up each quarter. William Stein - Credit Suisse: The...

Yeah? William Stein - Credit Suisse: I'm wondering about camera modules and others...

Yeah, camera modules, it's been heavily affected. Our top customers in that field or in that product category were Sony Ericsson and Motorola. So I'd say that's also very, very significantly down. Going forward I actually also once again expect that to be a growth area for us in FY10. We diversified that base of business very substantially over the last couple of quarters, added some really nice new top tier accounts that supply hereabout over time. And so we expect, but we also take that (ph) ones at the bottom and for the next three or four quarters, we actually expected it be going up by about 25% a quarter, by about 20% a quarter. Pretty significant. Relative to big power business, our power business is probably is in process of crossing the $500 million per year of threshold. So that business year-on-year in FY10 versus FY09, will grow a good 25%. So that business is also growing. So that business will grow nicely and probably one of our biggest growth drivers from the component business and we'll have a substantial increase in profitability. William Stein - Credit Suisse: And then on the...

Yeah. William Stein - Credit Suisse: Just one quick follow-up if that's okay. Sony Erickson's no longer your biggest customer. Do we view that as a permanent change and in what segment is your new number one customer?

What we don't view -- you know well what do we view as a permanent change. I mean certainly for the forecast for the foreseeable future we view that as a permanent change. Who is going to be number one after, we don't have a number one customer. The customers that are growing rapidly, not surprisingly are the ones in the PC industry. And we could see some and new leaders emerge as a result of that. So but it's this kind of early to say we don't have any 10 %, customers planned for this next quarter either. There is a chance we get to a 10%, customer by the September quarter I think, and but I think its going to be some new leadership. William Stein - Credit Suisse: Thank you very much.

I expect us to grow more simultaneously so that we don't have a 10% customer.. I like to say one another thing, we just missed one of the other vertical, which is services. We really have two services business, one the retail technical services business, where we're actually out in the field, servicing products. That also is -- has been a nice, lower revenues but higher margins and that does continues to be a nice growth business for us in the FY10, and also our this recent logistics business worldwide has continued to deliver very, very strong results during the downturn here. So we also view that to be a pretty strong business going forward. William Stein - Credit Suisse: Thank you.

Okay, next question?

Our next question comes from Sean Hannan of Needham & Co.. Your line is open. Sean Hannan - Needham & Company: Yes, thank you. If I could just actually follow-up on some of the vertical capabilities, as was questioned little bit earlier. Obviously in this environment you're seeing some of the impacts in terms of what the head wins that could presented out of that type of model. Can you just discuss, at least in terms of -- from a strategic point of view, how it is that you view that model going forward? Whether you're considering eliminating perhaps some less strategic capabilities remaining at status quo or even continuing to build from here?

Yeah, so we'll pursue that change and reduce the amounts. It's a difficult time when you're vertically integrated, because like I said at the component level, you get kind of a double hit. You get the downturn of the economy plus you get an inventory adjustment, on a go forward, but alternatively we can see the value of the model. We see the value of being able to drive more business into the company, whether it even uses the vertical capabilities. It's a strong start point as we go into the customer base. Every one of top tier customers has become more and more engaged with Flextronics. They use more and more verticals. So without question, the value statements there and also from a margin standpoint I actually believe as these things mature, they actually will deliver a higher profitability. If just go through my last commentary on the components businesses, the services business is going to be a growth industry for us in FY10. The power industry is going to be a growth industry for us in FY10. The components (ph) markets will be growth. Our PCB, flex circuits touch panel that we put in place is all going to be a growth driver in FY10 relative to FY09. So real downsides to the FY09 are the more traditionally or in FY10 are the more traditionally in those businesses. So, we actually like the model. We think it's right. It's a little painful in that down market, because you get on a little bit of an accelerated margin impact, but that's over. And as we look forward, we're actually quite bullish on these businesses. So again, we think the inventory adjustment period has kind of run its course. And we think each one of these businesses -- we think each one this business will have substantially higher profit growth relative to last year. Sean Hannan - Needham & Company: That's helpful. And a quick follow-up on some of the restructuring comments if I may. There was a comment I think that, we had seen about 86% of the charges in COGS right within this past quarter. And wanted to see if there is a way we can get a sense when this is all wrapped up in the next two to three quarters, and we look at the savings, the level that we should expect to see out of the COGS line versus SG&A?

Yes, sure, this is Paul. We would expect to roughly 70:30 split cost of sales to SG&A in savings going forward and roughly $200 million within the range that we quoted for the fiscal '10. Sean Hannan - Needham & Company: Terrific, thanks so much.

Our next question comes from Amit Daryanani of RBC Capital Markets. Your line is open. Amit Daryanani - RBC Capital Markets: Thanks, you guys -- I guess just a few question of restructuring stuff as well. Doesn't sound like you're expecting a big uptick in sales any time soon, as you're not going to in the 5.5 to $6 billion range for a few quarters. Based on the restructuring you've announced it looks like you're probably going to hit 2, 2.25% EBIT margins on that revenue run rate? Can you just talk about what revenues do you eventually need to get to the 3, 3.5% target?

Yes, that's hard to say. Volume is one thing but also, mix is another. And there is also -- we're not done with trying to drive costs out of our business. And one of the other things that we have at our disposal is, I've talked a little bit about whether the revenue driver is in that margin components, but certainly there is some leverage in the profitability. So, when you put all that into a bundle it's not just volume that we need to end up driving up to what I have called normalized profitability. We can't work the mix, we can't work the components. We do have some of the restructuring charges that haven't yet kicked in. And so we still have a lot of levers that where we don't need the volume. And so we do expect to get some modest improvements in the volume. And if we get anything more than that, I mean someday there's going to be a recovery you would think. And we think that will be upside to us. So there's still a lot of levers for us to go pull to -- to try to drive to those normalized profit levels. Amit Daryanani - RBC Capital Markets: Well, I used my assumption at the sense of why not take a lot more capacity out of the model, because one of the things you got to have it’s a fairly flexible model. So it’ll be relatively easy for you to add capacity when demand comes. So why not get to the 3% margin even on a 6 billion run rate?

Well again we're not saying we can't do that. And we're saying there's a lot of levers left. If we needed to do more restructuring at this point in time from what we see in the future, we would do more restructuring. We actually think this is the right amount out. And the one thing that you have to keep in mind is, the amount of people we have today are exactly equivalent to what we need to run the business, there is no excess capacity. And this is -- the largest cost of running our business is people, because we are a people business. The second major element of capacity is equipment. And granted, we're not going to take good equipment and just idle it and then write it off and then bring it back online once the business comes back. We don't think that's the way to run a business. We don't think it's appropriate. And it just means we have to go sell that business back we have to sell a certain amount of business to get that utilization back up. But that is a much lower cost on people. And the third measure element of capacity is just number of buildings. And you can go write-off a lot of buildings and not have a meaningful impact on the P&L. So the fact that are out there, it's real estate, it's really not going anywhere. It's tangible, and you can touch it. We just don't see the need to go write that off. So, rest assured that the actions that we've taken today, we have the amount of people we need to go run the business. And that is the largest cost of business. In the meantime we'll go try to book some more business to consume the excess equipment. Amit Daryanani - RBC Capital Markets: Got it. And just finally, Paul, maybe you could talk about -- how should we think with CapEx in fiscal '10 at this point?

Yeah, we'll just reiterate what we said last time that our CapEx plans for the year should be roughly $200 million. Amit Daryanani - RBC Capital Markets: Got it.

And our depreciation is 400. So there is a positive picture there in cash. Amit Daryanani - RBC Capital Markets: All right. Thank you.

Thank you so much.

Our next question comes from Shawn Harrison of Longbow Research. Your line is open. Shawn Harrison - Longbow Research: Hi. Just to follow up on the restructuring questions. Maybe you could discuss the linearity and then say you get back to $6.5 billion. How much of these savings are actually permanent in nature?

Well they are all permanent in nature. They are taking people out and it's reducing capacity in certain areas. And yeah, I would say they are all permanent. Shawn Harrison - Longbow Research: Okay. And then just in terms of the linearity of the savings as we move through FY10, if we've seen any so far or is it back-end loaded to December and March quarters?

We had a small amount in the March quarter, fairly insignificant. But the run rates -- we will see them in the back end of this fiscal year. So Q3, Q4 for us you'll see more normalized run rates in those periods, and we'll build up to that.

We'll get full benefit as we go out of the third quarter and into the fourth quarter. Shawn Harrison - Longbow Research: Okay.

Second and four quarters. And the total amount of savings is, we anticipate being anywhere from 230 to $260 million. Shawn Harrison - Longbow Research: Okay. And as a quick follow-up, there was a joint venture announced with Asia Optical during the quarter. Maybe if you could just elaborate on exactly what that means for you.

Yes, it is a -- it is an attempt to go create a little bit of a stronger company. Asia Optical has a lot of optics capability in the digital shot camera space. Flextronics has a lot of design capability, particularly in the higher end camera space with the big design center in Japan. And we also have quite a bit of business with our biggest customer being Kodak. So the idea is to put rather than have us compete against each other, it's actually we felt we were stronger putting those capabilities together into one stronger company rather than being separate and having us having not quite enough pieces to compete by ourselves and Asia Optical also not quite having enough pieces to compete out its own. It's an attempt to create a full service, full scale a complete company. And that's the idea of the JV. So as we look forward and strategically how that fits in as you look at the digital camera space, even if you look at some of our biggest customers which are Polaroid and Kodak over the last couple of years, the real leadership is built around Canon and Olympus and Nikon. So it's a lot harder to get into those companies. It's a lot harder to create value. And we thought this was a way to under -- realizing that the market is different. The end customers are little bit different, there is fewer of them. And they're probably a little bit stronger and already have more capabilities. We thought this was a better way to go service that market. Shawn Harrison - Longbow Research: Okay, thank you very much.

Our next question comes from Lou Miscioscia of Brigantine Advisors. Your line is open Louis Miscioscia - Brigantine Advisors: Okay, thank you. Mike, I was wondering if you could define how much business in the revenue drop actually was customers actually bringing the business back in house in comparison I guess to the revenue that was actually just weakening demand or just give us some kind of feel for if that was a big portion or just a small portion of the total?

Yeah Lou, I don't know if I can -- if we can quantify that. And even some of the customers just didn't have anything fairly to bring it back in house. Nokia made a big announcement they were going to bring things back in house. And we don't service Nokia on the assembly side. We only service them on the power charger side and some of the other products. So, we are more on that component side. So I think that's genuinely bringing in business back in house. I don't think most of our customers -- I can't think of anything specifically -- we don't quantify it I guess is right. I don't think I can give you a real good answer. It's not as much as you might think. And I think the way to think about it is the biggest impact with us is someone like Sony Ericsson, where they had a reduction in the number of units. And they have a fixed capacity in their factory and it's a joint venture. And they didn't really bring products back in house. They just left that capacity full and at the same level. They didn't add capacity for that factory, it's just that they left that full. So we kind of get what's left after that and that was a lower number. So, nothing really came out of Flex factory, in the Sony Ericsson factory, but it was more along the lines of the available amount of business after they closed the factory was significantly down. Louis Miscioscia - Brigantine Advisors: Okay, great. On the SG&A line, I don't see you guys have brought that number down, that's pretty significantly quarter-to-quarter which is great. But then one of your comments was that, it's still a lags that some of those cuts are still going to be coming in. Could you give us an idea as to where you think maybe it will go either next quarter or maybe towards year-end or something just to help us understand how where we should look at SG&A moving to?

We're predicting some modest improvements now going forward. And I think a range of 170 to 180 is something you could model. Louis Miscioscia - Brigantine Advisors: Okay, great. And last question is just on the tax rate. Historically, obviously you guys have a fantastic tax rate. And it's usually been below 10% or maybe in the 8 to 12% range. I think you mentioned 10 to 15, anything changing there that would end up going up to the higher end of that number, or when we look at the years we modeled 10 or 12?

It's a range is 10 to 15, so it's -- we've to make estimates for the full fiscal year and some of the catch-up or through-up that we had during the March quarter, because earnings significantly reduced in the second half in certain jurisdictions and that's just very difficult to predict. So, the range of 10 to 15 is one you should be using, it's heavily geographical jurisdiction independent. There's been certain increases in current jurisdictions around under world like China, there's been some holidays that rolled off in other parts of the world. So, it's -- in the last 12 months there's been a significant amount of volatility in this area and sort of difficult to predict where an operating tax rate go forward of 10 to 15, we feel comfortable with. So, when we take I don't not know if there's a follow-up to that level. Louis Miscioscia - Brigantine Advisors: And just one last quick one, Mike. I guess as when you look across your customers, I know mentioned something positive about the medical side, as the severity of the downturn, is there a lot of still captive demand that you all can go after, or obviously we've already have calm (ph) and computing mostly outsourced. So, you really don't have the downturn pushing a lot of OEMs to bring significant and material new amounts of business to you in that set. Thank you.

Yeah, you're exactly correct. I mean it's mostly in outsourced market and overtime that kind of market share gains, kind of floats a little bit what the industry does. The medical industry will have incremental outsourcing with -- we think without question. And part of it is creating the capabilities in our company to be able to enable that decision by the medical OEMs. I think the more we have first class facilities that can create value and have a broad set of platforms and different kind of product ranges that we can participate in. I think it opens up more business for us. And that's how we're looking at the medical space. So we do think more is going to come out. We expect this to be a growth line for us this year although modest. And this is on the heals of quite a few cutbacks in the medical industry because even in the medical industry the hospitals stopped ordering, there's less elective surgeries, even things like blood glucose meters has less sold because people start to test less. And so, there's actually a lot of head wind in that industry, yet we expect to grow for the year. So a lot of that is just we put together real broad portfolio of capabilities and I think the better those capabilities are the more we'll enable a future there. So we think it's positive. So we're going take one more question if we could. Thank you.

Our last question comes from Steven Fox with CLSA (ph). Your line is open.

Thanks, good afternoon. I'll keep it brief, but just basically could you talk a little bit more about the prospects of your customers now having stabilized and starting to talk more about outsourcing and is that something that could potentially surprise to the upside in your results, maybe over the course of next year or is it too early to think about that?

Yeah. If it's tie-up your question's like a kind of tie in to Jim Suva's question there. I think it's too early to have any real surprise, big factory announcements that are coming in the EMS, there is going to be bits and pieces. There are some going on right now. But I won't call it really a meaningful change. I think it's bits and pieces here and there. So I don't think that's significant. So I kind of view it as more of a modest uptake that we'll see over time.

Okay, thank you.

All right. I would like to thank everybody for joining us this afternoon, and we'll talk to you next quarter. Good bye.