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Giant PC outsourcer throws in the towel

Sanmina-SCI sells business to Foxconn and Lenovo

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Sanmina-SCI, the US electronics contract manufacturing company, has sold its PC business to Foxconn, a major Taiwanese competitor, for between $80m-$90m. It is also selling its Mexican PC plant to Lenovo, for an undisclosed sum.

Foxconn will get its mitts on factories in the US, Mexico and Hungary, but we must wait for Sanmina-SCI's Q2 earnings call in April for further details. The deal is expected to close by June 28.

Considering that PC manufacturing accounted for $3bn or so of Sanmina's $10.3bn revenues in 2007, the price that Foxconn is paying shows how terrible margins are in this business, and how keen Sanmina is to get the hell out of there. Sanmina-SCI says the two deals should result in a $200m benefit - as it has "significantly reduced the net assets" in the business since last year, when it first announced its intention to flee PCs.

Sanmina-SCI also builds computer servers for clients. But a company that is capable of junking a $3bn revenue line because it is "no longer integral" is capable of junking anything.

IBM, HP and Lenovo are the company's three biggest customers, accounting for more than 10 per cent of current revenues, Sanmina-SCI noted in a recent 10-k filing.

Press release here. ®

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