Release Date: April 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you help us parse the communications and cloud segment's 36% year-on-year decline? How much was communications down and how much did cloud grow?
A: (Jure Sola - CEO) The communication market has been down for the last three quarters, mainly due to inventory adjustments and softer demand in certain segments. Cloud is performing better, representing about half of the 33% revenue from the communications and cloud segment. We are starting to see some normalization in the supply chain and more predictable forecasts.
Q: Can you provide more details on Sanmina's expertise in optical packaging, specifically regarding 800 gig and 1.6 terabytes?
A: (Jure Sola - CEO) We have been investing in optical advanced packaging, shipping some 800 gig products, and developing 1.6 terabytes with partners. These are mainly in the NPI (New Product Introduction) phase, focusing on optical networks and modules.
Q: How do you see the overall cash conversion cycle and free cash flow trending, and what are your priorities for uses of cash?
A: (Jon Faust - CFO) Our cash conversion cycle is in the mid-70s, aiming to return to historical levels in the 50s. We focus on working capital initiatives to improve cash generation. Our capital allocation priorities are organic growth, strategic transactions, paying down debt, and share repurchases.
Q: What gives you confidence in the sequential revenue improvement expected next quarter?
A: (Jure Sola - CEO) The confidence comes from better visibility and forecasts from our customers, indicating that the second half of the calendar year will improve. New programs are also expected to contribute to this growth.
Q: How is the joint venture in India trending?
A: (Jure Sola - CEO) The joint venture in India is performing well, with strong interest from customers and expected growth. It continues to operate effectively, contributing positively to our business.
Q: What percentage of total revenue is from AI and machine learning products, and when do you expect optical spending to show meaningful improvement?
A: (Jure Sola - CEO) AI and machine learning, part of the cloud segment, represent a significant portion of the 33% revenue from communications and cloud. We anticipate improvements in optical spending by the fourth quarter of this year, with forecasts looking up.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
