Fitch cuts Flextronics view to negative

Fitch Ratings has revised the outlook on Flextronics International Ltd. to negative from stable.

Flextronics' BBB- issuer default rating and senior unsecured bank credit facility are affirmed, as is the BB+ senior subordinated debt.

The negative outlook reflects Flextronics' expectations for lower organic revenue growth, Fitch's belief that the company will be challenged to meet near-term operating margin targets and the potential use of high cash balances for shareholder-friendly transactions and/or acquisitions, Fitch said.

The ratings continue to reflect the company's industry-leading cash conversion cycle, which has consistently contributed to annual free cash flow and one of the industry's best-positioned low-cost manufacturing footprints, Fitch said.

Ratings concerns center on integration risks related to the acquisition of Nortel's manufacturing facilities, Flextronics' acquisitive history and more aggressive operating strategy and increased operating leverage associated with the company's vertical model, Fitch said.

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