UPDATE 2-Benchmark Electronics Q4 rev view tops Street, shrs up

* Q3 adj EPS $0.27 vs est. $0.20

* Q3 rev $510 mln vs est $493.55 mln

* Guides Q4 rev above Street

* Shares up 7 percent

(Recasts; adds conference call details, analyst comments)

By Mansi Dutta

BANGALORE, Oct 27 (Reuters) - Contract electronics manufacturer Benchmark Electronics Inc (BHE.N) posted better-than-expected quarterly results and guided its fourth quarter revenue above Wall Street estimates, sending share up as much as 7 percent.

Electronics manufacturing service providers have benefited due to extensive cost-cutting initiatives earlier this year and a spike in demand for technology products heading into 2010.

"Looking to the fourth quarter, we continue to see positive signs that the economy is beginning to slowly recover, with increasing demand," Chief Executive Cary Fu said.

The CEO's statement sounds encouraging as Benchmark has fallen on hard times over the past few years as revenue growth stalled in light of challenges in the high-end computing business, driven by weakness at Sun Microsystems (JAVA.O), analyst Brian White at Ticonderoga Securities said.

In April, Oracle Corp (ORCL.O) agreed to buy Sun Micro but the deal is yet to be cleared by European regulators. Oracle CEO Larry Ellison recently said Sun was losing about $100 million a month due to the delay.

"A lot of their Sun's business had been posing headwinds, we're now to starting to see a period where other customer relationships are starting to shine through in their top line," Needham & Co analyst Sean Hannan said.

Sun, which represented 16 percent of Benchmark's total sales in 2008, has been contributing less than 10 percent of the company's revenue for the last two quarters.

On the other hand, IBM (IBM.N) emerged as a 10 percent customer this quarter.

For the fourth quarter, the company expects earnings of 22 cents a share to 26 cents a share on revenue of $520 million to $560 million.

Analysts are looking at earnings of 22 cents a share on revenue of $518.23 million.

For the third quarter, the company's net income fell to $16 million, or 25 cents a share, from $24 million, or 35 cents a share a year ago.

Revenue fell 21 percent to $510 million but came in above Street estimates of $493.55 million.

Sequentially, revenue was up about 60 percent.

"During the quarter, we saw strong shipments on all the other industry sectors we serve except the telecommunications sector, where we saw a slight decrease," Cary Fu said at the call.

Excluding items, the company reported earnings of 27 cents a share compared with Street projections of 20 cents a share, before items, according to Thomson Reuters I/B/E/S.

Bigger rival Flextronics International Ltd (FLEX.O) reported better-than-expected results Monday and projected stronger demand next year. [ID:nN26121774]

Benchmark's shares were trading up 6 percent at $18.45 Tuesday on the New York Stock Exchange.

For alerts, double click [ID:nWNAB4709] (Reporting by Mansi Dutta in Bangalore; Editing by Maju Samuel and Saumyadeb Chakrabarty)