* Company has goal of hitting operating margin of 3.5 pct
* Higher wages in China affect components manufacturing
* Has moved some of its operations to inland China
LOS ANGELES, Sept 8 A Flextronics
International (FLEX.O) executive on Wednesday said the company
is facing headwinds in hitting an operating margin goal of 3.5
percent, due in part to rising costs in China.
Investors have been cool to Singapore-based Flextronics
because of its low margins, even though the electronics
manufacturing and service provider which counts Dell Inc
DELL.O and Verizon Communications Inc (VZ.N) among its
customers had sales of $24 billion last fiscal year.
Flextronics said at an investor event in May that it
expects to hit an operating margin of 3.5 percent when it
reaches a number of benchmarks, including quarterly revenue of
$7.5 billion, which is close to what it has guided for this
Chief financial officer Paul Read said at the Citigroup
Global Technology Conference in New York on Wednesday that the
company still has a goal of 3.5 percent operating margin, but
he did not say when the company would reach that goal.
"Short term, we've just got some headwinds on the
components side (of the business) and as we get past them in
the next one to two quarters, as we look ahead to next year
we'll see a lot more improvement (in margin)," Read said.
Flextronics has been pressured by rising wages at its
electronics components manufacturing operation in China, and
the company has moved some of its operations to inland China in
search of lower labor costs.
The company on July 22 reported an operating margin of 2.9
percent for its first fiscal quarter.
Shares in Flextronics rose 2.7 percent to $5.40 in mid-day
trade on the Nasdaq.
(Reporting by Alex Dobuzinskis; Editing by Bernard Orr)