Good afternoon, and welcome to the Flextronics International Second Quarter Fiscal Year 2011 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 meeting over to Mr. Kevin Kessel, Flextronics Vice President of Investor Relations. Sir, you may begin.

Thank you, and good afternoon everyone and welcome to Flextronics conference call to discuss our results for our fiscal 2011 second quarter ended October 1. Joining me on the call today is our Chief Executive Officer, Mike McNamara; and our Chief Financial Officer, Paul Read. The presentation that corresponds to our comments today is posted on the Investor section of our website under the link titled Conference Calls and Presentations. And can also be accessed directly from our home page. During the call today, Paul will first review our financial results and highlights and Mike will comment on the business environment and trends we’re currently experiencing. Additionally, Mike will provide guidance for the third quarter of fiscal 2011 ending December 31st, 2010, and conclude with quarterly highlights, following that, we will take your questions. Please turn to slide two, where I will cover the risk and non-GAAP disclosures. This presentation contains forward-looking statements within the meaning of the US Securities Law, including statements related to revenue and earnings guidance, our expectations about our future operating margins and return on invested capital, expected revenue growth in our market segments, expected improvements in profitability of our components business unit, our expectations about the availability of components for our products, 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 12 of this presentation and in the Risk Factors and MD&A sections of our latest annual and quarterly reports filed 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 adjusted financial results which are non-GAAP financial measures. Please refer to the schedules on the earning press release and the GAAP versus non-GAAP reconciliation in the Investor section of our website, which contain the reconciliation to the adjusted financial measures for the most directly comparable GAAP results. I will now turn the call over to our Chief Financial Officer, Paul Read.

Thanks Kevin and welcome to everyone on the call today. I will review some of the highlights of our financial performance of the second quarter of fiscal 2011, and Mike will provide some additional insights on our current business trends including our guidance for the third quarter of 2011 ending in December. Please turn to slide three. Second quarter revenue came in at $7.4 billion, which was above the high end of our guidance range of $6.8 billion to $7.2 billion and represented a strong 13% sequential increase in sales. The increase was nearly double our ten year sequential growth rate for September quarter at 7% and was the third highest growth for this quarter in the last decade. In addition for the second quarter in a row, we saw sequential growth across all of our markets segments. This was principally driven by new outsourcing programs with both new and existing customers combined with favorable seasonal trends experienced by our mobile, consumer digital and computing businesses. Adjusted operating income was $213 million, up $23 million or 12% sequentially and 43% above the $149 million a year ago. GAAP operating income which includes stock option expense was a $199 million, up $24 million or 14% versus the prior quarter and more than 60% above the year ago level of $123 million. Adjusted net income for the second quarter was a $179 million, increasing 16% sequentially from our first quarter and more than 70% from $104 million a year ago. GAAP net income which includes the impact of intangible amortization was a $144 million, expanding 22% from last quarter’s strong result and coming in at more than 7 times at $20 million a year ago. GAAP net income represented an all-time record high for Flextronics. We reported adjusted earnings per diluted share for the September quarter of $0.23, which was above the high end of our EPS guidance of $0.19 to $0.21 and grew sequentially by 21% from $0.19 last quarter and was almost twice the $0.13 from a year ago. Our GAAP EPS was $0.18 timing an all-time company high and almost 30% above the $0.14 last quarter. Please turn to slide four. Adjusted SG&A expense totaled $188 million in the quarter, up $4 million sequentially and $23 million year-over-year on revenue increases of $856 million and $1.6 billion respectively. We were able to keep SG&A dollars within our expected range despite significant revenue upside in the quarter. As a result, we leveraged our SG&A percent of revenue down to 2.5% from 2.8% last quarter and a year ago. Despite this being the third lowest quarterly level for SG&A as a percentage of sales, we remain confident that we can clear the leveraged SG&A in the future as we grow revenue. Our adjusted operating margin was 2.9% and improved 30 basis points from the 2.6% last year. We are continuing to see strong performance from our core EMS businesses and are confident in a continued execution in growth. Unfortunately the strong performance in related margin expansion in being matched by continuous below normalized profitability of our components businesses. We’re making very good progress in the operational performances necessary to improve the profitability of the components businesses which experience substantial sequential revenue growth during the quarter. Though it is taking time for these businesses to work through their growth issues, we feel confident that they will have meaningful contributions profitability as a whole by year-end. Our EBITDA rose $317 million in the September quarter, up 10% from $289 million in the prior quarter. Our LTM EBITDA grew to $1.2 billion. Year-over-year our EBITDA rose 30% for $74 million from $243 million in the year ago quarter. Our adjusted EPS rose to $0.23 from $0.19 in the prior quarter, an increase of 21% and was more than 25% above the $0.13 during a year ago. Please turn to slide five. Looking at the income statement items below the operating lines, adjusted net interest and other expense was $21 million, down from $23 million last quarter and $33 million a year ago. The company is seeing the benefits of deleveraging over the past year but we suggest for our current quarter modeling in the range of $20 million to $25 million to capture the interest in our new term loan and any FX fluctuations. The adjusted tax expense for the quarter was $11.9 million, reflecting an adjusted tax rate of approximately 6.2% which remains beneath our stated guidance range of 10% to 15% range. Our reduced tax rate in the quarter was due to some one time credits received as a result of settlement from outstanding tax audit matters and finalizing certain filing possessions. For this current quarter, we would suggest modeling approximately a 10% rate which is at the low end of our 10% to 15% range. Our weighted average diluted shares outstanding came down more meaningfully this quarter from $824 million to $784 million as a result of seeing the full impact of our first $200 million share buyback and a partial impact a bit approximately a $100 million that are just related to our second $200 million approved share buyback. Our current quarter, we suggest modeling $775 million shares outstanding, which takes in to account the full impact of all our buybacks to-date. Finally, turning to reconciliation items between our GAAP and adjusted EPS, stock-based compensation was $13.9 million in the quarter and represented $0.06 EPS impact. Non-cash interest expense was $1.6 million, but is now ceased as our convertible bonds were retired in August. EPS impact of this non-cash interest was less than $0.01. Intangible amortization, net of tax was $19.5 million in the quarter, up from $16.7 million last quarter and also represented a $0.02 impact. Please turn to slide six. Flextronics working capital management remained at industry leading levels of 12 days, which is two days less than the prior quarter and three days below the prior year. The two day sequential decrease resulted from achieving off balance sheet treatment for our global ABS program reversing the two day increase we experienced last quarter. We remain confident we can maintain our cash conversion cycle in a 10 to 15 day range which we see as important and that will allow us to continue to grow our business efficiently with significant positive free cash flow and low working capital requirements. We believe that at these cash cycle levels, our net working capital as a percentage of sales will remain in the 3% to 5% range. This quarter, we were at the low end of that range of 3% which is a great accomplishment. Inventory rose $318 million or 9.6% sequentially, and inventory turns improved slightly to 8.1 turns from 8.0 turns. We expect more improvement once the component supply environment returns to a more normalized state. DSOs declined one day to 36 days and still remain within our targeted range. DPO was flat at 69 days. Flextronics asset management continues to improve and is driven substantial improvements in consistency in our return on invested capital. For the quarter, ROIC increased to 31.9% a record high for our business, well above the 22.2% over year ago and up from 28.8% last quarter. Please turn to slide seven. Flextronics generated $509 million in cash flow from operations during the quarter, marking the ninth consecutive quarter the company has generated positive operating cash flow. Our cash flow from the quarter was benefited by $150 million due to the amendment of our global accounts receivable securitization program during the quarter. Net capital expenditures for the quarter were $123 million versus a depreciation expense of $98 million. Free cash flow for the quarter was $385 million or $235 million if we exclude the impact of the amendment to our global ABS program. During the September quarter, we repurchased 29.2 million shares for $195 million with an average purchase price of $5.62, finishing our original $200 million we repurchase plan and also executing on $100 million of our newly approved 200 million repurchase plan. Year-to-date we have repurchased 51.1 million shares for approximately $300 million with an average purchase price of $5.86. Please turn to slide eight. We ended the quarter with $1.8 billion in cash, up $57 million versus the prior quarter, principally reflecting our free cash flow generation offset with a $195 million in cash payments to repurchase common stock. Total debt fell $162 million sequentially as mainly as a result of amending our global ABS program to achieve our balance sheet treatment. Our net debt which is defined as total debt less total cash fell to $444 million from $663 million. Net debt has declined by over $1.4 billion or 76% from our June 2008 levels. Our debt-to-EBITDA level continues to decline and ended the quarter at 1.9, down from 2.2 last quarter and 3.0 last year. The graph at the bottom of the slide shows our significant debt maturities by calendar year. With our $240, 1% converts now retired, our next maturity is not until 2012. During the quarter, we also put in place a $180 million in attractive priced term loans with a couple of our Asian banks. With that, I will turn the call over to our CEO, Mike McNamara.

Thank you Paul. The healthy business environment that I discussed last quarter remained intact for us and we feel confident about the broad based strength in our business, our competitive position and the solutions we are able to offer our customers which remain in high demand. Our orders and forecast continued to improve as we approach the end of 2010. In our upcoming quarter, we are forecasting modest sequential growth across virtually all the markets we serve. I’ll expand on this further when I discuss each business in more detail. Please turn to slide nine. Our low volume, high-mix businesses were led by communications infrastructure growth this quarter. Infrastructure sales were $2.0 billion and represented 27% of total sales. This segment grew a healthy 12% sequentially and came in above our forecast as a result of broad based strength across our existing customer base, new market share wins and our lessening impact from component shortages. In general, component shortages across our entire business moderated. We estimate our $125 million to $150 million impact for the overall company down from roughly $200 million last quarter. Based on declining number of shortage escalations, lead time trends and incremental component capacity coming online we expect component shortages to alleviate further in the current quarter in to reach normalized level sometime in early calendar 2011. Our December quarter outlook for infrastructure costs will continue to sequential revenue growth in the low to mid single-digits. Our growth is being afforded by strong new bookings with both existing and new customers. We added seven new infrastructure customers during the quarter and also have multiple new market share wins. We expect the growth in our infrastructure segment to continue over the next several quarters and we remain confident in our double-digit growth forecast for the fiscal year. Industrial, automotive, medical and other comprised 20% of total sales, down from 22% last quarter, which was fifth straight quarter this combined growth achieved sequential growth and its 30% year-over-year growth rate ranked second only behind mobile. Our industrial segment was stable during the quarter in line with what we forecasted. We had another very successful quarter of new program wins which totaled over $250 million and was spot across the diversified base of customers in markets. We continue to be optimistic about all the various areas of our industrial segment including kiosk capital equipment, clean tech, meters and controls, appliances, aerospace and defense. Overall, we remained very well positioned in this segment. Our medical segments strong performance continued this quarter, growing sequentially in the high single-digit range setting new quarterly and monthly revenue records. Medical growth was driven primarily in our medical equipment and consumer health and diabetes businesses. In general, our major new program ramps are either on or ahead of schedule. Medical has booked close to $150 million of new medical wins during the first half of fiscal 2011 and it seems even more attractive sales pipeline ahead. We see low single-digit sequential revenue growth from medical next quarter, which translates to a roughly 30% year-over-year growth rate. As a result, we will also be expanding our medical presence by opening a new operation in Malaysia. We expect to announce the details in the press release shortly. The momentum in our automotive group continued at its record, as it recorded its fourth straight quarter of sequential growth. The demand environment has remained strong especially for our premium European car customers who are seeing significant growth in the APAC region. Our group continues to have success winning new in car connectivity and interior lighting programs, where we focus and have a strong confidence. It was also announced during September that Flextronics Automotive was selected to be the global manufacturing for Brammo’s Electric Motorcycles. We believe we are very well suited to pursue and win additional business in the electrical vehicle technology market as it grows and matures. Mobile sales expanded another 15% sequentially to $1.5 billion or 21% of sales which was ahead of our expectations and improves seasonality and multiple new program wins drove the majority of the segment growth. For next quarter, we see this segment growing further, increasing mid to high single-digits sequentially. In computing, we posted $1.3 billion in sales, which accounted for 18% of our revenue. This segment was up 6% sequentially and during the quarter we launched two new all in one programs into volume. We also had two other mobile computing programs ramp to full volume. Our enterprise server and storage business also grew again sequentially as we a solid growth across the number of different accounts. For the December quarter, we are forecasting consistent levels of overall production. We still expect to achieve our long-term growth rates for ODM business. Consumer digital rose 49% sequentially in the September quarter, up further acceleration of the 15% sequential growth in the June quarter. The segment ended at $1.1 billion or 14% of total sales. New program ramps and favorable seasonality were the clear drivers of growth. For the December quarter, we are currently forecasting modest single-digit growth as the majority of ramp-ups in this segment took place in the September quarter, in order to give product built and into the supply chain for holiday consumption. Our components business comprised primarily up Multek, VistaPoint and Power all three to continue to perform below optimal levels. As we discussed last quarter, our components business are in the midst of a significant revenue expansion and we anticipate the revenues growing in excess of 30% from fiscal 2010 level. This steep growth has improved challenging due to the complexity of the products and processes involved. Our strong revenue expansion in our components business endorsement from our customers that we have the right capabilities and products. Now it’s up to us to expand margins to the fiscal year into next. At a positive note, Multek continued to make improvements and we are confident in its growth outlook. Flexpower also saw its operating loss shrink as we continue to make progress and the relocation of manufacturing to inland China, in addition to winning multiple new adaptor and charger designs including a few for tablet products. VistaPoint saw its quarterly revenue double sequentially. This was much deeper sequential growth experienced in June quarter when it grew over 40% sequentially. We made significant progress in improving yields and efficiency for our camera module division and expect improvements in profitability beginning this quarter. Our global service business focused on after markets activities such as logistics, repair and warranty and service parts logistics. This business continues to improve on a quarterly basis and our capabilities continued to grow. We announced several new operations in India, expanded operations in Europe and we’re recently awarded Brocade Service Partner Award for the service of all their SAN and IP switches. Our Retail Technical Services or RTS business provides competitive and flexible field services for customer operations such as Verizon, American Express Open, Systemac and AT&T. Also, during the June quarter RTS launched our new branded Firedog business. The initial launch has gone well and the customer satisfaction ratings are very high to-date, Firedog fits nicely into our services portfolio and it’s focused on business-to-business and business-to-consumer field technical service. It also provides in-store, in-home, phone and web based installation maintenance and support services for electronic products. You can find more information on this new business at www.firedog.com. We ended up the quarter with two customers slightly over 110% of sales RIM and HP. Now returning to our guidance in slide 10. Our guidance for revenue range in the range of $7.5 billion to $7.7 billion, which corresponds to a sequential growth range of 1% to 4% and is up 2.5% at the midpoint. We expect our adjusted earnings per share to be in the range of $0.23 to $0.25 versus the $0.23 just reported. Quarterly GAAP earnings per diluted share is expected to be lower than the guidance provided at year-end by approximately $0.04 for intangible amortization expense and stock-based compensation expense. Please turn to slide 11, key takeaways. Our second quarter continued our record, a recent trend of broad based revenue and profit growth. For the quarter ahead the midpoint of our guidance range once again points to continued growth in revenue, operating income and earnings per share. Our key takeaways are as follows. First, we delivered strong sequential and year-over-year revenue growth of 13% and 27% respectively. Also every market segment in business unit posted quarter-over-quarter and year-over-year growth. Second, we experienced continued profitability and EBITDA growth. Our adjusted operating profit rose 12% sequentially and 43% year-over-year. Adjusted earnings per share is growing faster rising 21% sequentially and 77% year-over-year. We’ve also seen our LTM EBITDA increase to $1.2 billion which is up 7% over the prior quarter and 37% over the prior year. Our debt-to-EBITDA ended the quarter at 1.9 times down from 2.2 in the prior quarter and 3.0 a year ago. Third, ROIC ended the quarter at 31.9%, our highest level ever and up from 28.8%. And lastly, our strong cash flow and free cash flow generated – that we generated has fueled our recent stock buybacks. During the quarter we generated $509 million of cash flow from operations and $386 million in free cash flow. We also repurchased a $195 million worth of stock during the quarter. Now I’d like to open up the call for questions. Operator?

Thank you. (Operator Instructions) And our first question will be from Amitabh Passi. One second. There we go Amitabh Passi, your line is open.

Okay, thank you. Hi, can you hear me?

Yes.

First question was gross margins came in about 30 basis points down sequentially. Was that purely a function of mix, given how strong consumer was, any incremental color, in terms of what might have affected the margin performance in the quarter?

Yes Amit, its Paul. Yes, that’s correct. It was a big season ran for the consumer products so that historically if you look back, it’s always had a negative impact on gross margins for us. So that’s principally the reason there.

Okay, Paul would you expect some of that to maybe reverse as we go into the December quarter?

Yes, I think it can. I mean September and December are fairly similar, but I think that we will see a little bit more of a bottomed out in the December quarter. So hopefully we’ll see some improvement there.

Okay and then perhaps for you Mike. You talked about particularly in your consumer, and your telecom Infrastructure segments, new consumer wins that allowed you to perform pretty well in the quarter. Could you shed some light on what these programs are and then well, I’ll leave it there. Just if you could shed some color on these two segments and what the new program wins are?

Yes, we – as you know we don’t normally announce new program wins unless we get authorization from the customer to do so. What I can tell you is the existing customers the progress and the ramps that they had were well above, I would say, I won’t say well above the expectations but above expectations. And I think we saw a little bit more of that happened in the September quarter, where normally it happens a little more in the December quarter. So I don’t know if they’re pre building for the Christmas season putting more on the sea which we think might be part of it. But we saw a very significant strength from the September quarters and much more than our normal seasonality. And I think it tended to fuel from the growth in the revenue above expectations. But I can in general say the existing customer base provided a lot of that growth.

Okay, and then just one final question. On your components business you talked about having made some progress. Again could you perhaps elaborate, and how should we think about the margin progression as we go through fiscal ‘011 into fiscal ‘012 for your components?

Yes, well the September quarter we thought would be a difficult quarter from a profitability standpoint, because we were right in the middle of very, very significant ramps and also simultaneously working to approve operations. So in the Multek area, it’s doing along fine. So I don’t think there is any real transition that we need to make, it has just continuously added revenue which has continued to add additional profitability so I think Multek is well on its way and we probably in our company don’t need to really focus on it too much. We think that one’s making good power. In the Power, it got hit particularly with the direct labor as we talked about last period. We’ve got the inland strategy underway, we have multiple new wins that are improving the topline and between the two of those, we also think that’s making nice progress. So once again we expect just continuous improvement there. VistaPoint was a little bit different. We were implementing new process technologies that were challenged with yields. Revenue doubled quarter-on-quarter and we focused very heavily during this quarter in last time improving those operational efficiencies. And these are very significantly improving. So I would say that we’ve almost had a transition – had a change during this quarter for the operational efficiency that we need to move this thing into profitability. So between the three of them, they’re all on a positive track and while September was difficult for us, we’ll expect to see continuous improvements going forward. So I believe those is occurring start next quarter and I expect them to carry on for the next few quarters.

Thank you and congrats.

Thank you.

Next we have a question from Matt Sheerin with Stifel Nicolaus. Your line is open.

Yes thanks, Mike, so you talked a little bit just now on some of the seasonal trends and it looked like in the September quarter you had some customers that were better than normal, maybe pulling in. Does that account for the fact that your guidance seems, to be a little bit less in seasonal than what you’ve seen in prior years, or is the mix is different now?

Yes, I think in one case yes we did have a strong September as we talked about, we’re up 13% sequentially and a good part of that was mobile and consumer. Going forward, we see a little bit less seasonality in the December quarter, I think that’s partly because it’s moved into September. But the other thing I would say is in general we’re going to be a little bit less seasonal as a company. And we’ve kind of alluded to that and there is really two implications that one is December is going to have a little bit less pop and at the same time we think March is also going to look like a little bit more stability and a little bit less of that seasonal downtime that we got in the past. So I think you’re going to see both of those effects, not only a slower December but I also think you’re going to see a better March.

Okay and just wanted to get back to the issue on components because I think it’s an important part of your margin expansion story and your operating margins have been sort of capped here below 3%, despite a very strong revenue growth. So I guess, the question is, could you give us a little bit more granularity in terms of what kind of margin goals you have for the different component divisions, and when they get to those targets, what would the overall operating margin of the company look like relative to what it looks like now?

Yes it’s Paul, Matt. So we think that it certainly negatively impacted us for the last few quarters, as they work through these really big ramps in revenues. We think going forward we had a very good month in September which was very encouraging from an operational perspective to see the things are kind of getting on track. So they will start to contribute more positively now through December and certainly by year-end I think that we’ll see a good, meaningful contribution. But I think we look into next year in fiscal ‘012, as I had outlined back in Analyst Day back in May kind of size of things. When these businesses are running at 4% and everything else here with revenues and mix being equal as I had outlined then, we’re going to be running margins in the mid 3% range. And that’s still what we think about the way it should contribute certainly the components are going to be good contribute to majority of the way towards that from where we are today but also increased revenues and obviously the core delivery in the mix that we get. It’s important as well.

Okay, that’s helpful. Thank you.

Next we have a call from Sherri, I’m sorry, Sherri Scribner with Deutsche Bank. Your line is open.

Hi, thank you, I think I’ll follow up on the components question Paul, talking about getting the components businesses back to 4%. How many quarters do you think that takes, is that a two or three quarter phenomenon or how long do you think that takes?

Well they’re going to make steady progress. I would have thought that we’ll see back, next year – next calendar year would be our target to get them up those levels. It’s certainly showing great signs of improvement, December quarter over March quarter but its real early days to say, it’s just heading in the right direction which is already positive for us.

Okay, and then in terms of your cash priorities now, clearly you’re buying back debt and you’re doing share buybacks which are all good for investors, what do you focus on now as you continue to generate cash over the next couple of quarters?

Yes, its – we still like to be in a good cash, strong cash position, $1.8 billion is strong we’ve hovered around $1.8 billion to $2 billion for some time, feel pretty comfortable with those levels, having some dry powdered to be optimistic both in the debt and equity markets, still we have a number of M&A opportunities available to us. They’ll be typically tuck-in, small in nature but we’re pretty big company running very diverse operations. So there is a lot of things that we look at but we’ll be very good to hold on. So I think that you’ll see us kind of running around these levels. It would fluctuate quarter-to-quarter with some works in capital needs and we still have authorization for $100 million remaining, of the $200 million share buyback program that we’ll constantly look at.

Okay, great. Thank you.

Thanks very much.

Steve O’Brien with JPMorgan, your line is open. Steve O’Brien: Hi great, thanks for taking my question. There has been a fair amount of written concern over the IT and computing industries. And maybe we’re biased towards Western hemisphere, but Mike, if you could touch on what you’re hearing from customers there in terms of inventories at the OEMs, at the distributors, because it seems like there’s not really a correction here implied in guidance. So there’s not some kind of slowdown to catch up to demand.

Well I think that’s a pretty broad set of categories but, clearly we do the same thing you guys do. On the IT front, we have a pretty broad based position. I would say it’s probably broader than anybody, all the way through into the Chinese customer base. So a lot of what you see weakness in some of the US and European customers, you see some strength in the Chinese customer. So some of that balances out for us. So it may not impact us much at all. If you look at our infrastructure business which is very, very heavily dominated by telecom, maybe not heavily but it’s equally datacom and telecom. We see a pretty strong growth, we’ve had at least four straight quarters of increasing revenues. We see for the next three or four quarters, probably continuous increases in revenues. So for us being as balanced as we are across the world demand. We actually feel pretty good about it and we have very, very diverse portfolio. We have a very, very strong market position. And with the broad based to customers, I actually think we outperform the market pretty well. So we haven’t been real nervous about that and haven’t really been taking much in the way of any customer’s downside. On the computing business you’ve seen a lot of comments all the way from the Best Buy CEO all the way through to where the tablets are in printing on that space. It’s still a growth business, and as that business changes, whether its notebooks or netbooks or tablets or smartphones, I mean no matter what predominant trend ends up being, we end up participating in it. So we’re in all those markets. It’s definitely a new benefit that we have as a result of being in the computing business. And on the PC business and we’ll take advantage of those times. So for us it’s going to be a significantly up, we’re continuing to pursue the PC business pretty aggressively and we expect to double that business again next year. So for us it’s up. So while there might be some trends down at the same time, we can offset those downward trends with different kind of businesses our customers and different regions. Steve O’Brien: Great, and if I could just clarify, so the $2 billion to $4 billion revenue goal is unchanged. And then also on the tablet side, I just wanted to maybe follow up to your previous answer and ask, the Asia ODMs have certainly made a lot of noise about their positioning within tablets. Has – do you feel Flextronics is also getting its fair share of tablet business here or does the ODM notebook strategy need some fine tuning based on the potential for tablet cannibalization of the market?

While we use the same base of design engineers to work on both. The fact that we have such a strong position in smartphones along with development position in computing kind of puts us right into the sweet spot of this kind of products. So we feel they’re well positioned. We are not using and we are not manufacturing tables today. We have some in design which we will be producing, but those have not hit yet, so as far as when it were positioning exactly the same way I don’t know. But being a computing company that also has a real short position in smartphones is actually extraordinarily helpful. So we think is that as this transition occurs if you will and new product categories seems to be developing, we actually feel pretty positive about it. Interesting too that you have to keep in mind as we participate in these kind of markets like the tablet markets we are not doing flex circuits, we’re doing we are doing printed circuit boards and we’re doing power products also those businesses. And that positions us kind of nicely because well we did do our printed circuit boards in the computing business because it’s just a different lower end technology, but tablets actually use a smartphone kind of technology in the printed circuit board business. And we’re very well positioned in that play. So as a result we think it’s going to actually help our growth rates going forward Multek. Steve O’Brien: Thank you.

And to answer your first question, yes the $2 billion to $4 billion is still on track and that’s our expectation and we just feel comfortable about doing it. Steve O’Brien: Great, thanks.

William Stein with Credit Suisse. Your line is open.

Great, thanks. I’m wondering if you can give us an update on component lead times and ASPs as you see them in – certainly in your components business, what you’re able to do with customers but also what you’re facing from suppliers.

There is lot of different components but on average they’re starting to come down. And we expect that turn to continue over the next couple of quarters. So we think we actually.

So you’re saying that you lead times now?

Yes, lead times. Lead times are starting to come down. So I think once again the capacity of the industry continues to get closer and closer to the actual demand, our shortages are mitigating, demand escalations are that we chase on a daily basis are going down and we think you’ve find out two more quarters before everything is kind of in balance again, what our best guess is. So once that becomes more and more in balance as it approaches towards that balance I think we’ll see lead times come in.

Thanks Mike. But, typically along with that trend, do you see ASP erosion accelerate? Have you seen that at all yet, what are your thoughts on that?

I think they will be a little bit, yes I think that’s consistent with our thinking. That ASP erosion is good for our business by the way as those prices come down. We usually view that as positive and so but I think that ASPs hand in hand with lead times coming in.

And one quick one if I can, on the inventories. It was the – the result was fine I think this quarter, you’ve had fairly stable inventory days over the last couple of years. Should we expect this to change significantly over the next few quarters?

We would expect probably continuing improvement. I think the current base of business running at roughly 8 turns is probably about the right number. But I think as we move over business, or as we pick up more computing business, we’re going to run those even faster. So as we build the balanced portfolio of all these different line of categories, one of the characteristics is going to be a little bit stronger inventory turns. So I think once we get the past the last quarter which typically gives a little bit in inventory turns, I actually think you’ll see a little bit of a pickup in inventory turns.

Great, thanks Mike.

Yes, you’re welcome. Amit Daryanani with RBC Capital, your line is open.

Thanks for taking my questions. If I could, just continue on the inventory question, it looks like on a dollar basis the inventory was up quite a bit sequentially. Could you just talk about what drove that especially given the fact the September quarter guide doesn’t imply any big robust revenue uptick?

So yes, its roughly 9% or 10%. And you’re right, the midpoint of the guidance is less than that. I still think we’re working through some challenges in the supply change that’s making us run a little inefficient. The shortages out there, we’ve probably right around $125 million, $150 million standard revenue at the end of the quarter. Now it’s down from the previous quarter, so it’s getting better, it will probably like Mike said, take another couple of quarters to get it fixed and you’ll see that eat up. So we’ll be focused on inventory turns, turns were up 8.1, we expect turns to be up in December again unlike Mike said next year as we get a different blend or business is a little bit more computing, we’ll see the turns increase as well. So actually feeling pretty good where it is and its working well for us.

Got it, and then if I could go back to the component issue. I may have missed this in the whole discussion but are you guys breaking even currently? And then are you convinced at least on the camera side the issues you have are not a reflection of the pricing that you guys initially implemented and just true internal yield issue?

Yes, on the components business as you know I think the worst days are behind us. We were losing money, so I don’t think that’s a feature going forward. We’ll start to make some money now hopefully and on the camera side, I don’t think it’s an ASP issue, this is just about real extreme product ramps doubling the business quarter-over-quarter and getting to groups with the yield issues which looking at pretty good September. So we’re feeling pretty positive about the go-forward situation.

And then just finally I’ll get on the components are you seeing any impact from commodity and wage inflation, I guess more on the commodity side being another headwind on the component margins?

Its temporary headwinds, for sure where we’re building in China for example, we’ve seen a supply base increase in cost and of course with us producing components, it’s the same thing. So it takes some time to work through that with customers and we’ve had some success with that over the last quarter. And we continue to work on that, but there is somewhat of a lag, a delay which is reflected in our results last quarter.

Got it, thanks a lot.

Thank you.

Shawn Harrison with Longbow Research. Your line is open.

Hi, good afternoon.

Hi good afternoon.

Just a few clarifications. In terms of March quarter seasonality, looking at what we’ve so far year-to-date, they’ve been kind of twice as strong as typical for the first quarter, excuse me, twice as strong as typical for the second quarter, it looks like half is strong for the third quarter. Does that mean that particularly that mid-teens type of decline you usually witness in the March quarter could maybe be half that range of this year?

Yes, that’s correct. I think that’s a good way to think about it. It’d be significantly less and maybe half, a good number to think about.

Okay, and then two brief follow-ups, capital spending, it was targeted at $350 million to $400 million this year. Is there any update on that, and the other question is just on operating expenses. Where do you think – or at what rate can you take revenues up to before you start seeing a pretty larger movement in operating expenses?

Yes, I think for the full year it would be around $400 million in capital expenditure, having to support this large growth this year and next year, you’ll see us probably spending our depreciation levels which is roughly $400 million. And that’s in line with what we’ve been thinking. In terms of operating expenses, I would say that we’ll be running in that $190 million to $200 million for the quarter. There is some uptick that we’re seeing, of course growing revenues like we are – it’s inevitable. But it’s under pretty tight control, but we will see a range between $190 million and $200 million.

Okay, thank you.

Thank you.

Craig Hettenbach with Goldman Sachs. Your line is open.

Great. Thank you. Can you talk about on the computing ODM just progress first initial expectations in that market? And then also any milestones we should be watching over the next year?

Well from a revenue standpoint and our customers accepting and supporting us investing into the market, we’re right on target. We’ve continued to believe that it’d be a $1 billion, $21 billion and $4 billion for this three year period. That’s what has been our objective. And that’s straight on the nose and we thought we’d get good acceptance from our OEM customers. So I think all that has gone very close to plan. The only thing that I would say is that’s not gone to plan is yet there has been a deterioration in the average profitability of the entire ODM industry over the last say three quarters. We didn’t anticipate that going in and I feel that there has been a whole percentage point drop in operating profit in that industry. So I think that’s best of surprise, the good news is we’re making the progress that we thought we would and booking the business we thought we would. The downside is the result at the end of the tunnel might not be as strong as we had hoped and if you follow any of our past correspondents we always said, once we get up to $4 billion or $5 billion, yes we would expect to be at roughly industry average profitability. So those are the two real considerations that we look at it.

Just a follow-up on that, if pricing does remain challenging, what is your view of the trade-off between getting to those targets or at least the time it might take you to, where would you be more selective or is it more about ramping up to that scale?

Well I think you need to ramp through to scale to leverage the R&D expenses. So whereas as we ramp our contribution margin dollars even if we’re at 1.5%, 2.5%, 1.5% instead of 2.5% our contribution margin dollars were fairly positive. So for us in the stage that we’re at, I think you need that volume to amortize your expenses. Now at the same time we still think there is a lot to do with those businesses. We have a lot of other businesses are related to this, whole tablet business that we talked about being positioned in the computing business, actually enables us to be positioned into the tablet business. So as different trends in the industry occurs, I think you just need to be – you need to have these markets as something that I will comment to be in. One other thing I might add to in terms of the original expectations and the computing business relative to actuals. We always anticipated that we would run this business without burning cash. So what that means is we always start our working capital, our networking capital would be zero. And in fact this last quarter we actually had a negative eight days of working capital running the PC business. So one of the things that to think about it as you’re in those business, we’re actually not burning cash, it’s one of the reasons you just feel a lot of cash generation or the company, we’re not going into a business that actually consumes cash otherwise you wouldn’t be in it. As long as we don’t conserve cash and we can have a position in the industry, then our strategy is to be selective. And to make sure we don’t chase these down. I also believe that there has been a kind of a temporary disruption in the business. And I’m not sure that that with a lot of competitiveness from certain competitors and I’m just not sure that conditions going to exist in another year. And I think we may very well get back to in more normalized level of profitability in the ODM business. So I’m actually reasonably positive that we’ll return to a more normalized level.

Okay, and then following up on the comments about IT demand. Are you able to distinguish new program ramps that you’re winning versus just the overall demand environment, what you’re seeing, what customers are saying into year-end?

Well almost everything we have is in programs. Just the base – the maturity of the business. So we for sure see that. So we don’t run per the industry, we’re growing the business a 100% this year, we’ll grow it 100% next year. So we don’t run with the industry yet because we’re too small as a percentage of total revenue of this industry. So what we see is mostly new product ramps and then sometimes those ramps set the targets that the OEM has laid out and sometimes they don’t. But lot of times its more of a product-by-product specific as opposed to an industry characteristic.

I’m sorry, I meant the overall business, just the traditional EMS business. Sorry about that.

Okay. So say again what about the overall EMS business?

Just demand trends, and what you’re hearing from customers versus the influence of new programs that might be helping you?

All right, that’s – yes I think that’s a good question. We see both, what we in general – our business grows for the macroeconomic factors as well as any new product categories that we bring on EMS or any new incremental outsourcing. And certainly we see a somewhat of a slowing in a based EMS business. If you look a lot of data that’s come out, of the companies reporting just over the last two weeks, it seems like a lot of them are pointing to a flat quarter, which to us just a little bit slower growth. We spend a lot of time trying to figure out how we grow our business incrementally which we think is possible and we think it’s likely and those – so we’re adding new product categories. So how much of it is just the macroeconomic effect and how much is market share and new product category. It’s probably how to say that, we’re probably getting more of our growth, more of our growth next year will come from new product categories and market share wins, then it will from just general macroeconomic effects.

Okay, thank you.

Thanks.

Jim Suva with Citi. Your line is open.

Thanks and congratulations gentlemen for a great quarter. I wanted to ask a quick kind of detailed question about the upside to the sales this quarter. They really came in extremely strong anywhere between $600 million to $400 million compared to your outlook, depending upon low and high guidance. Can you maybe help us better understand the magnitude or percent of the upside not the total for the quarter, but the upside relative to your expectations such as, was consumer half of that, or was mobility half of that, and then I’ll probably have a quick follow-up.

Yes, we’ve probably ended up with about half of that business being just the mobile consumer businesses and probably the other half of it just being pretty good strength across the other businesses. And I’ll throw in one other effect Jim, which is the fact that we’re able to think we picked up a little bit in terms of on component shortages. We’re probably – we probably picked up an incremental $100 million just on some of these component shortages clearing. So the between the $100 million of component shortages clearing between and then the rest of it being 50% maybe from the consumer mobile because that was stronger and sooner, than what we normally seeing. And the rest of the 50% just came from the other businesses.

Do you mean mobile consumer as in two segments, right?

Yes. And if I bundle those together which are the two that normally had very strong seasonal ramps. Those seasonal ramps were quicker and sooner and more of it occurred in the September quarter it seems.

Okay, and was it more consumer or mobile?

I’m not sure which, but they’re both are pretty strong. If you look at – we provided some of that data, consumer digital was up 49% quarter-on-quarter and mobile was up 15% quarter-on-quarter, although mobiles are little bit of bigger product growth.

Okay and then my last quick part is, when you look at your mobile computing segment it’s pretty clear that you have a very strong customer there that represents over 50% of that, is your strength being driven primarily by the strength there or more diversification efforts, because, there is a fear out there that Flextronics has a very high concentration of that segment tied to a particular customer that people like to avoid risk?

Yes, so I’d just say it’s both. I actually don’t know the breakdown, but we had with the 49% growth, it is not just far from one customer. It’s pretty broad based to be honest with you. We do have a large concentration but, I don’t know if we know the answer. Maybe we’ll get back to you on that Jim and give you that number.

Great, thank you and congratulations to you and your team.

You’re welcome.

Brian Alexander. Your line is open.

Yes, going back to an earlier comment Mike, about the lower expectation for profitability in the PC business. I think you said that last quarter. I just wanted to confirm that nothing has changed since then. And then also it didn’t sound like you’re really leveraging your vertical capabilities in that business given your commentary around PCBs. So, I’m just clarifying, is that a change in strategy or is that consistent with you original intention when you entered that market?

Yes, so I saying it is – but first of all I have said that last quarter and I think I also said it when we did our May Annual Day, that the – just general profitability in the entire industry is off. So that’s correct. So that’s pretty consistent what we’ve been seeing in the last couple of quarters. And as far as leveraging things, we’d never expect this leverage Multek very much, although going forward in tablets, we will be levering Multek. So there are some categories that we just weren’t planning on leveraging. Certainly, Power was something where we planned on leveraging. And certainly our worldwide system to do worldwide repair and service and that we certainly expected to leverage. Camera modules, we originally anticipated leveraging pretty significantly, but I can tell you we backed off on that quite significantly and the reason for that is pretty obvious. We had so much smartphone business that’s going for camera logic business. So we just can’t handle the designing activities necessary to also be in the laptop business. So once that turns around, we’ll change. So I would say there is a number of things that we plan on leveraging and the number of things that we didn’t. So I don’t think it’s much different than our original expectations.

Okay, and then if I just extrapolate from the guidance for computing for the December quarter, to be roughly flat sequentially and then make my own assumption about the March quarter it looks, like if you’re going to add $1 billion in the PC business, year-over-year it implies the rest of your computing business is declining. So could you just drill down on that and help us understand what’s going on in the rest of the computing business?

Well we’ve been up in the last couple of quarters, going forward we actually do expect from the duration and kind of a high-end computing business like in the storage and service and mostly that’s going to be driven by Sun. So Sun is in process of redistributing its supply base a little bit. So that business – so it is significant chunk of that business that will move out of Flextronics. So that is going on simultaneously with the ramps of the computing business. Yes, that’s correct.

Okay.

But the other businesses are pretty strong, I think it’s mostly the front effect, but still expecting net gain out of it of course.

And then finally, just to clarify that the message on the components business sounds fairly consistent with what you said a quarter ago which is you saw sequential improvement in profitability or the rate of loss in all three of the sub segments. And you’re still on track to be above breakeven in the March quarter. I just want to make sure, I understand that correctly.

That’s correct, I mean there is nothing different than expectation. We expected September to be difficult and we expected that we had transition quarter for us and then now we expect continuous improvements and certainly profitability by the March quarter.

Great, okay. Thank you so much.

You’re welcome.

Lou Miscioscia with Collins Stewart. Your line is open.

Okay, thank you. A question, I guess on the improvement in revenue quarter-to-quarter, it looks like you’re getting pretty decent margin contribution from that. Is it above 10% quarter-to-quarter as you look out to December?

No I don’t think, I don’t think its above 10% in contribution margin. No I don’t think so Lou. It’s somewhat seasonal here in the December quarter and then obviously drops off little in March but from a net income EPS perspective for sure it’s very additive.

Okay, and then just a follow-up question, I guess on the last earnings call there was obviously a lot of questions about the wages going up in China, obviously with the numbers that you put up in the guidance. Obviously, no one has really asked the question. Just maybe if you can just give us an update how that’s playing out, I know you did say last quarter that it was just a normal part of your business but just an update there would be helpful.

Yes, we didn’t talk about it just because this could happen over and over and over again, as its jut not an activity though or not in a condition that we should be whining in though. It’s just definitely have to go do with and manage. Its affected us most heavily in Power, which talked about and we have a number of different activities associated with that. And a lot of our activity I mean, couple of our activities we did offset it with productivity activities and we’ve actually gone back and pushed pretty hard with customers in a number of different products for price increases. So all three of those activities have been going on pretty aggressively. It’s certainly a headwind but certainly affecting us this quarter. But it’s part of the normal course of business. So we’re dealing with it.

Okay, and the final question on the pull in for September on the consumer stuff. Is it basically more stuff is going on the sea, and maybe that’s why you’ve got so much more pulled in, or just anything else, and then that’s it for me. Thanks.

Yes, we want to have a real good quantitative data on that but that is exactly our feeling. So we’re starting to see earlier production and more going on the sea, maybe if that cost of capital is so low for lot of the companies. They’re less concerned about committing that inventory to the sea. But we actually do agree with that statement and think that’s exactly what’s going on.

That’s what I’ve been hearing from my OEM contacts. Okay, thank you.

Operator we’ll take this question and one final question after that.

Okay, Alex Blanton with Ingalls & Snyder. Your line is open.

Good afternoon, I was interested.

Hello.

Hello?

Yes, good afternoon.

I ‘m sorry, I guess you’re on – I don’t know whether you are on speaker or not, but.

Yes we can hear you Alex.

Just go ahead Alex.

Okay, I wanted to ask about – or just make a comment and then ask you about the 3% working capital to sales ratio, and what would you say the CapEx for your incremental investment would be, say a 5%, that means that your incremental investment is 8% of every sales dollar. So that if you only earn a 4% return on the sales that’s a 50% return on investment, is it not, I mean if you earn 3% then it’s very high also. So doesn’t this really, speak to the fact that you have a business that is where the materials are largely a pass through, and so looking at the margin based on the sales dollar is really misleading?

Yes, well first of all I must that you’re right, working capital is in the range of 3% to 5%. Capital expenditure, a typical growth here 10% to 15% we’ll spend roughly our depreciation which is about $400 million. So you’re looking that anywhere from 7% to 10% of sales in terms of cash needed to invest in the business for that sales growth. And with the 3%, minimum 3% return on that, obviously it’s a very accretive model and see it at 31%, 32%. And our cash balance built etcetera. So it’s certainly very attractive for us as a business model.

Yes, well a 3% margin would be about 38% return on incremental investment.

Yes, it will certainly.

And secondly I wanted to ask you about the seven new customers you got in the infrastructure business. Is there anything you can say about that, not who they are specifically, but what kinds of infrastructure, where they large, small? Give us some flavor for it because that’s a very interesting number since you already have 50% or so of all of the outsourced infrastructure business. If you get seven new customers, that’s a pretty good achievement.

Yes, so as we think we have enormous market competitive advantage in infrastructure customers. And we already have all the big ones, not necessarily the number one market share with all the big ones, but with many of the big ones. We have the largest or very, very large market share. So as we go to build out business and diversify it, we actually like taking some of the new comers. We think having companies that have a $100 million businesses or maybe able to grow up to $500 million as an attractive way for us to continue to fill our factories. And we have a system that enables us to go take those low volumes, high mix customers which tend to have a little bit better profitability, simultaneously with the big eyes, we’ll be able to service them very, very effectively. So we like having it. We like the diversification. We like the little bit higher margins, where it certainly can create a lot of value for that those set of customers as a result of our capabilities and size. And so we’ll continue to chase – I think we really like the low volume, high mix business. They’re part of it.

Okay, thanks.

You’re welcome.

And you still have time for one more, correct?

Correct.

Yes.

Steven Fox with CLSA. Your line is open.

Thanks, good afternoon. I’ll keep it brief. Just very quickly, just to understand when you say that by the end of the calendar year the components business will be achieving acceptable profitability. Can you just provide more detail on what type of benchmarks we’re talking about that you’ll be at?

Yes, we think at the end of the – when we say the end of the year we mean the fiscal year. So couple of more quarters. They’re definitely pulling themselves out of the whole from last quarter made a good September month. We’ll see them start contribute and more meaningfully contribute probably in the March quarter. And then next fiscal year for us get to that target range is that we talked about before. So gradual improvement and very positive improvement for us throughout the next few quarters.

So not to pin you down but do they all exit the fiscal year in the black at least?

Yes.

Okay, thank you.

Thanks.

Thank you. Thanks everybody for attending.

Thank you.

That concludes today’s conference call. You may disconnect your lines. Thank you for participating.