Welcome to the Flextronics International second quarter fiscal year 2010 Earnings Call. (Operator Instructions) At this time for opening remarks and introductions, I would like to turn the call over to Mr. Warren Ligan, Flextronics' Senior Vice President and Investor Relations and Treasury.

Welcome to Flextronics' conference call today to discuss our results of our fiscal 2010 second quarter ended October 2, 2009. On the call today is our Chief Executive Officer, Mike McNamara and our Chief Financial Officer, Paul Read. The presentation that corresponds to our comments today is posted on the investor section of our Web site under Calls and Presentations. We will refer to each slide number as we move through the presentation. During the call today, Paul will review our financial results and Mike will comment on the business environment and demand trends for our company. Mike will conclude with our guidance for the third quarter ending December 31, 2009, and after that we will take your questions. Please turn to Slide two. This presentation contains forward-looking statements within the meaning of U.S. Securities Laws, including statements related to the revenue and earnings guidance, our expectations about future operating margins and return on invested capital, the expected charges and savings associated with our restructuring activities, and our expectations regarding end market demand for our products and our business in the current economic environment. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these statements, are based on our current expectations, and we assume no obligation to update them. Information about these risks is noted in the earnings press release on Slide 14 of this presentation, and in the Risk Factors and MD&A sections of our latest Annual Report filed with the SEC, as well as an in our other SEC filings. Investors are cautioned not to place undue reliance on these forward-looking statements. Throughout this conference call we will reference both GAAP and non-GAAP financial measures. Please refer to the schedules to the earnings press release on Slide 5 of the presentation and the GAAP versus non-GAAP reconciliation in the Investor section of our Web site, which contain the reconciliation to our most directly comparable GAAP results. Now I'll turn the call over to Paul.

Good afternoon everyone. Today I will recap the financial highlights and performance for the second quarter and Mike will provide an overview for the business, identifying segment and custom trends, as well as third quarter guidance. Please turn to Slide 3. During the second quarter Flextronics posted solid financial progress, reflecting our continuing efforts to resize our business to adapt to current market conditions. Our second quarter revenue was $5.83 billion, which was towards the top end of our $5.2 billion to $6.0 billion guidance range. Adjusted earnings per dilute share was $0.13 which represented an increase of 63% sequentially from $0.08 in our June quarter and exceeded the top end of our $0.07 to $0.11 guidance range by $0.02. Adjusted operating profit of $149.0 million increased 65% sequentially and our adjusted operating margin expanded substantially, rising 100 basis points sequentially to 2.6%. these improvements were driven primarily by the realization of cost savings from our previously announced restructuring activities and improvements in our vertical performance. Interest and other expense increased sequentially by approximately $4.0 million to $33.0 million, mostly due to lower interest income driven by the divestiture of our Ascsent note receivable. The adjusted tax expense for the second quarter was $12.5 million, reflecting an adjusted tax rate of 10.8%. We expect that our existing tax rate will remain in the 10% to 15% range for the remainder of fiscal 2010. Finally, our adjusted net income for the second quarter was $104.0 million, increasing 65% sequentially from $63.0 million in our first quarter. Please turn to Slide 4. As this slide indicates, we have had healthy expansion of our adjusted gross margin, which rose by 90 basis points sequentially. With our restructuring activities in full gear and improvements in our vertical performance, we are now seeing the benefits…

Today I will update you on what we see in the business environment regarding our market segments and business units, including demand trends, and some highlights of our achievements in the second quarter. I will close with some takeaways and our financial guidance for the third quarter ending December. Let's start with our results for each of our marketing segments and business units. Please turn to Slide 10. We believe our infrastructure segment hit a downward inflection point this quarter, and we expect profitable sustained growth going forward, moderate at first and then gaining traction as the economy turns around. Infrastructure sales came in at $1.6 billion, representing 28% of revenue. On a sequential basis, infrastructure revenue declined 12% as this segment was generally weak and we had some continued optimization of customer mix to help improve ROIC. With regard to Nortel, the pace of revenue erosion has been slowing and Nortel now accounts for 3% of our sales. That being said, Nortel's recent sales of its CDMA wireless business to Ericsson and it's enterprise solution business to Avia is a positive for Flextronics. We have strong existing relationships with both Ericsson and Avia and given the sticky nature of the products and our cost competitiveness, we expect to retain a significant portion of these businesses, which now appeared poised to show revenue growth. During the quarter, Flextronics also received Cicso's 2009 EMS Partner Operational Excellence and the B2B Collaboration awards. We would like to thank our infrastructure team for their hard work and outstanding operational performance, which was recognized by this important customer. Our long-term relationship with Cisco is obviously very strong and we will continue to provide them with the best-in-class customer service and operational excellence. Now turning to our computer segment, which was $1.1 billion, or 19%…

We will now take questions.

Your next question comes from Jim Suva - Citigroup.

Operating margins at 2.55%, pretty impressive, but I believe I heard Paul mention that the majority of the restructuring benefits are now built into the income statement. I wanted to see if I heard that correctly and do you actually see 3% operating margins at some point on the horizon, or what is the revenue run rate we need to get there, or what are the milestones we can look forward to to potentially getting there, or is that just a little bit too high to expect?

We have recognized roughly 75% of the savings in the income statement so far, in the September quarter run rate, so we still have a little bit left to go. I said the majority of the savings have realized, which they have, and we will probably realize the remaining 25% mostly in the December quarter and then tailing off into the March quarter, which will give the down run rate that we said, $230.0 million to $260.0 million on an annualized basis. The 3% operating margin is our target still. Like I said last quarter, we are looking forward to a little bit of a seasonal uptick in revenue, a good mix profile, our verticals continuing to improve their performance, and a little bit more restructuring coming. So that's our target. You know, our guidance suggests a little bit below that, at the midpoint level, which we understand, but at the high end, when you moderate out, it should come around 3%, which we shouldn't fall but there's a lot of things that have to come to play for that to happen.

I believe Mike mentioned that there were some component shortages on the mobile side of things. Given the recession and the relatively short supply lead times from the semiconductors and the glass makers and things like that, I guess I'm a little surprised to see and hear of some component shortages. Can you talk about maybe what they were and more importantly, have they been resolved or are you still seeing some shortages that are constraining your revenues?

We are certainly seeing more component shortages. We actually could have shipped more revenue last quarter had we not had any and the component shortages really are not just in mobile but they are somewhat across the board. We are chasing quite a few parts in quite a few different product categories right now. And in general, what we're seeing is that there is a little bit of a business expansion out there and the flexibility in the component supply base is just not there. A lot of the semiconductor fabs are running at pretty high utilization levels. There are some challenges in getting people in some of the low-cost regions, particularly in China, to ramp that quickly. So we are actually chasing a lot of parts right now and expect that not to really take off until probably next quarter. I would call it—and it's not just one or two components, it is primarily a broad push out of quite a few lead times that we're seeing.

Your next question comes - Sherri Scribner Deutsche Bank.

I was hoping to get a little more detail on the charge you took to write off, I think you said an investment. Can you give us a little more detail on what that for?

So we took the charge to write down some non-core investments, both equity and notes receivables, as a kind in the quarter and we have said all along that we would be looking to monetize some of these non-core assets. We did that in the June quarter and we realized $255.0 million of cash with the sale of the Ascent note receivable. We have got now roughly about $30.0 million to $40.0 million on the balance sheet left in non-publicly traded companies and we see very little risk in that going forward. It's certainly in the near term that we can see. But that's kind of been happening in the last couple of quarters.

So the note receivable that you wrote off was related to anything with customers. It was primarily related to a non-public investment?

That's correct.

And then just looking at your cash, you've done a great job generating cash over the past couple of quarters. It seems like you are peaking out now. You did $300.0 million in cash flow from operations this quarter. Do you think that number is the peak for you and we sort of come down from here? And then related to that, in the past you've talked about maintenance capex somewhere around $200.0 million, maybe $250.0 million, I think, but it looks like you're spending less than that. What would you say your maintenance capex is right now?

The cap ex we've said that for the year, roughly $200.0 million. It's currently underspending that but we would anticipate that for the fiscal year we would probably be at about that run rate, recognizing our depreciation is roughly $400.0 million. So it's certainly underspending that considerably. On the cash to hit $300.0 million in a quarter I would say is a high point for sure and we have a couple of seasonal quarters with high revenue demands that typically you would get less free cash flow but nevertheless, we expect to see positive free cash flow through December and March also. But not at those levels.

Just to clarify, it seems like you're going to be ramping up capex a little bit in December and March. Is that the way to think about it?

I think it will trend slightly higher than the current run rate, but nevertheless, stay within with 200 for the year.

Your next question comes from William Stein - Credit Suisse.

A little bit more on the restructuring, if I can. You say that the benefits there will likely end after the March quarter. When that is done, what kind of contribution margin do you think the company achieves, assuming relatively stable mix between assembly and component?

We will recognize the remaining of the restructuring charges, which is roughly $20.0 million to $30.0 million, over the next few quarters. And our recognizing a majority of the savings now, the contribution margin is very mixed. We have at least ten different business units in this company that range from 5% to 15% in contribution margin, so it's hard to put a number on it [inaudible]. That's the range we have for each business unit.

Follow-up on the discussion about shortages. We certainly heard across the supply chain for a while, actually, about a lot of vendors going on allocation. It would be helpful to comment as to what you see happening over the next quarter or two. Do you think that's going to loosen up? Are you seeing supply come online and are you seeing pricing adjust owing to the shortages?

We're actually not seeing much in the way of pricing effects. We are seeing these component shortages kind of across the board. I don't rule out pricing effects but we really haven't seen it that much. The only real impact that we've seen is lead times pushing out. We have seen some of the other companies beginning to offer money in order to secure source of supply. That is an activity that's going on in the marketplace. We really haven't been pressurized that much. In some components which I would say are staring to firm up, pricing, so very often the components, fly-base electronics, has continuous reductions in costs and we are seeing some of those continuous reductions in costs kind of slowdown. So we are a little bit concerned about it. So I think it's a trend that's continuing. I would hope to see some of that mitigate by the end of this quarter, because a lot of what's pushing the upside here is the demand on the components' supplier is a seasonal uptick. So I think once that seasonal pop mitigates a little bit in the March quarter we could see it moderate a little bit. Another question you asked was one of the other points about is how long will it last, and we actually are seeing some orders being placed on the semiconductor equipment manufacturers in both fab capacity as well as test capacity. So I think the component manufacturers are actually beginning to release capex to go fix that problem and I think that’s a very, very positive sign of them believing that maybe there is some continuity into the coming quarters.

Your next question comes from Louis Miscioscia - Brigantine Advisors.

First questions is, and not really looking for guidance here, but your March quarter has generally seen a wide range of seasonality. You know, you've gone everything from being down 30% in 2009, which obviously was probably an exception, given the financial crisis, to only a modest 9% decline quarter-to-quarter in the March quarter of 2004 of 9%. Can you give us an idea of what you might think just normal seasonality would be? Would it be somewhere in the mid-teens, or the low-twenties, for the March quarter, sequentially from December?

We're not really ready to give any kind of guidance on March, but in general I would say is the more significant downward changes in Flextronics that you've seen in the past is not going to be as high. We have some offsetting that the core business, which includes infrastructure and industrial, and automotive and medical and those kind of businesses, tend to be a little bit larger percentage of the company now. And the computing business that we have invested in over the last two years will probably show a pretty strong growth in the March quarter. So I actually think the seasonality that we are going to experience this March is going to be substantially less than the historical numbers. So we'll have to wait and see what that looks like but we actually anticipate in-house, I mentioned about the infrastructure business, we actually expect that to strengthen up over the coming quarters. And that includes the March quarter. So there are some signs of strength into that quarter. We think the mobile and the consumer typical downward pressures are not going to be as large as they have in the past, so I would expect overall Flextronics to see less of an impact in the March quarter than we've seen, really, in the any of the previous quarters. Any of the previous years.

Another question, looking out to 2010, with so many big cap infrastructure areas getting hit so hard, I guess the question would be if we're going to see a more of a rebound, and obviously we are getting stabilization here, we're getting some upside with some companies. But when you look out to 2010, this isn't again, Flextronics guidance, what are your customers saying? Are they starting to get reasonably optimistic and starting to ask you a lot of questions about your ability to upside and I guess maybe if you could handicap if that is happening if it’s optimism or if there is some real expectation to that happening?

You are talking calendar year 2010 I think, right?

Exactly.

We do see some customers that are getting nervous about the supply chain. There are customers that are looking to secure component source of supply and we have some customers who are asking us to do "what if" scenarios on upsides. So we are seeing some of that. Now whether or not any of that comes through, I don't think they know for sure. I think a lot of them that are even asking for this upside are nervous but nonetheless, the fact that they are asking us for upside scenario planning is a pretty positive thing. So we don't want to say we know what it looks like next year for Flextronics business. We expect computing to grow just because we are introducing some additional new programs right at the end of September here that will kick in. We just won a number of different programs that we haven't actually haven't announced, and some of those will start to kick in the March quarter. We mentioned infrastructure where we think it's probably going to be up, each of the next few quarters, so we do have some of that visibility from those customers. So it's hard to say, but we are probably getting more positive signs about next year than we are negative signs.

Last question is just about the cash on the balance sheet. Obviously you have been taking debt down pretty steadily. Do you think that that will continue or do you look to buy some shares back or are you just going to let it sit there for a while?

We have some debt repayment coming up in August next year, $240.0 million of the 1% converts, and we plan on that. And then, really, we're focused on investing in the possible growth of our business. Whether it's organic or otherwise and then, of course, we always remain opportunistic with the debt and equity market out there. It's also very good to have a substantial cash balance and a lot of liquidity at times like this. It's good to be prudent.

Your next question comes from Alexander Blanton - Ingalls & Snyder. Alexander Blanton - Ingalls & Snyder: I asked this last quarter, let me ask it again. SG&A keeps going down and it looks as if when sales go back up if you can hold it around the $165.0 million to $170.0 million level, you can decline to around 2% of sales. Let's say your sales go back to $8.0 billion to $9.0 billion, where they were, it would be around 2%. Is that an achievable goal? That could mean a pretty high operating margin, above the 3% you are talking about.

We really haven't modeled out what $8.0 billion, $9.0 billion, $10.0 billion a quarter looks like, to be perfectly honest. But it would be hard to think that SG&A would drop below 2.5% of sales. It's always been our target, certainly it's in great shape right now. But there is an R&D component that there is a little variable that will grow with sales as we continue to invest in some of our product businesses. And so I would expect that to uptick. I would have thought with another 10% or 15% growth in sales we can keep it relatively flat, dollarwise. But beyond that, it's going to be underpriced. Alexander Blanton - Ingalls & Snyder: Still, if it gets 2.5% and you have a 6% operating gross margin, which you've had in the past, you would then have a 3.5% operating margin, wouldn't you?

I think that's right. And the 6% margin we've had in the past, it's obviously something that we think about. It's very mix-dependent in terms of the kind of businesses that we bring out, as you know. Certainly getting down to 2.5%, we've already been down to 2.5% and since we've had that level we've also simplified our operation, one of the things we've done during the downturn. We just have a simpler structure. We have fewer locations and the opportunities to keep SG&A low and maybe even challenge the 2.5% level, is high. So there is an opportunity to go after that. The 6% gross margin is really mix-dependent, and like Paul said, we run, about .4% of that SG&A is really R&D. And when you think about some of the R&D we have some of the R&D we have, we have materials business and we have cut-screen business. We have a power business. We have a lot of different businesses that require pure R&D. So the fact that we are able to saw a pure EMS margin if we hadn't had all of those would even be quite lower. But certainly we will work to beat the 2.5% level. We've been there before. We will certainly work hard on the 6% level. We've been there before. We are looking at being able to run and drive a more efficient company than we've had in the past and when we've hit those numbers in the past, we've been in the midst of trying to consolidate Selectron and really be able to manage the change as well as being able to manage the actual numbers. And going forward, we won't have as much of that effect. So we are optimistic about our ability to get to real good levels there.…

What we're doing is—I think those numbers are roughly correct. Capacity doesn't mean that the people are sitting there in idle waiting for work, it just means we have enough facility and we have what I would say, we are prepared to invest in equipment rapidly to achieve those kind of capacity levels. So yes, we probably our existing facility can go up to about 600,000 or 700,000 a month. The new facility really has what I would consider to be unlimited capacity, so that the first step we'll take will be to take it up to about a 1.2 billion units, in terms of facility space. These are very, very big programs. It's hard to book any business with a customer unless they can see some clear facility space for them. And very often when a customer gives us a piece of business, their objective is to give us more business after that. It's not meant to be static. So the customers starts us off on a consumer notebook. The intent is that there will be more business after that. So they actually like to see some ability to expand and grow and some of the times we have a little inefficiency with the facilities just because we want to protect one customer from the other customer. So we are getting ready for that. We continue to be pretty bullish about our business and we've always called it notebook business, but we've also booked multiple all-in-one projects. We have booked some best sell projects now. We have booked some notebooks that are targeted for both consumer and enterprise markets. So we are starting to build a pretty broad portfolio of different kind of products and also different kind of customers and for different kind of markets. So as we see those possibilities, we are real interested in making sure we have runway and we don't slowdown that growth.

Your next question comes from Matthew Sheerin - Thomas Weisel Partners.

I would like to ask a question regarding your mobile business. Can you talk, Mike, about and give us a rough idea of the customer concentration in that business today and steps you are taking to diversity that business to avoid the issues that you have encountered in the last few quarters with the two big customers?

What you said is exactly correct. We will look to continue to diversify it. We probably have five or six different customers. Well, even more than five or six. We have probably added five or six over the last year and a half. We have added multiple customers in Japan. We have added some customers out of China. So I don't know what to say except it is our objective to continue to diversity that portfolio. We will also look to diversity that portfolio because we do chargers, we do camera modules, we do raw printer circuit boards. We do services around the world. So we are looking to diversity that portfolio, not just in terms of different customers in the EMS apps business, but also across each of the different product categories and component technologies that we participate in. So that is exactly what we are trying to do. As we discussed, we feel we are kind of at the bottom now of the adjustment period that we've had to go through, which is significant. And we now view it as a rebuilding exercise. So we will look forward to taking it from the baseline that we believe we have today and moving it forward, and looking to penetrate in all the different market categories that we can participate in. That's just the EMS business.

And as a follow-up, you talked about some of your component businesses and in Multek on the PCB side obviously has a lot of exposure to handsets. Are you seeing that business bottom out as well and signs of growth there?

Yes, it's already bottomed out and I think all of our business apps kind of already bottomed out and I think it's on the recovery. We are expecting, if I think about Multek only and address that question, we saw revenue growth with them this quarter. We expect to see pretty nice revenue growth next quarter and we expect our March quarter to also show some nice revenue growth. Partly that's some diversification which was in the products we're building in Multek and part of it is just some of the recovery we're seeing from the marketplace itself. So it did grow this quarter. We expect it to grow next quarter and we expect it to grow in the March quarter. And in each one of those different quarters we would expect expanding margins. And it's one of the places that we expect to see some margin improvement going forward. We are at the 2.6% level now. As Paul mentioned, we still have a little bit of room left on if we see some revenue uptick and we still have some room left on some of the restructuring charges, but one of the other key drivers for us is what we're seeing is a pretty good uptick of some of our verticals and we're going to see expanding margins out of those over the next couple of quarters as well.

Your next question comes from Brian White - Ticonderoga Securities.

I wonder if you could talk a little bit about the notebook market. How big is that business right now, a revenue run rate and where do we expect it over the next year?

It's just hard to pick a moment in time. We had a good run at it in the April time frame where we hit that cycle for notebooks. We introduced another pretty high-volume program just his September. We didn't see that much of it in the computing numbers yet but it's beginning to ship. It just started at the end of September, which will catch the Christmas season, which is another pretty good volume notebook. And we have a number of other wins that will kick in over time. So it depends on what end of the quarter you're talking about. September was also actually a lot different than July's results. So I think the way to think about it is more on a year-on-year basis. We do expect it to continue by the end of the year to be running at a 1.5 billion to 2.5 billion run rate. And certainly next year we would expect significant expansion from that level.

And in the infrastructure business, you are saying this will grow sequentially through the March quarter?

That’s what we're anticipating, yes.

And what vertical within infrastructure is that coming from?

We have some customers that are just picking up. We actually had a low point in Q2, in the infrastructure business so we actually think it bottomed there. Most of our customers are seeing a sequential uptick in Q3 and we are also being pretty successful in terms of new customers wins. More new program wins at existing customers is probably a better way, even though we're getting some new customers as well. I think it's a little bit of everything. We've penetrated the Chinese marketplace in infrastructure so we are actually seeing some pretty good strength there. So I would say it's a little bit of customer wins, it's penetrating the key Chinese infrastructure OEMs, and it's the fact that we're coming off a pretty significant bottom. Between all those three, we're expecting a pretty good run for the next few quarters.

In the December quarter, what market do you think we will see the biggest sequential uptick?

The biggest sequential uptick will probably be either mobile or computing, one or the other. They will both have a pretty good move up.

Your next question comes from Brian Alexander - Raymond James.

Just a question on the earnings guidance. If I just use the midpoint of your EPS guidance, it implies operating margins are up about 20 basis points quarter-on-quarter. Despite the fact that you will be growing revenue by about 6%, which includes growth in the vertical components businesses and some leverage there and also layering the remaining restructuring savings. Really the majority of those, which should help you by about 30 basis points in and of itself. So I'm just wondering why wouldn't we see more operating margin expansion, sequentially, in the December quarter with all those tailwinds?

You have some significant mix changes, all them is December quarter when margins are somewhat depressed. The opposite being in March quarter. So I think you have to offset that negatively. And when you run the midpoint, like you've just said, you're probably at the high end of 2.8%, 2.9% operating margin.

And just on the vertical components businesses specifically, any way you can talk about how far below peak margins those businesses are and how much growth you might need to see in those businesses to get back to peak, and any color by vertical, whether it be Multek versus the point reflex power to help us gauge the magnitude of that would be helpful.

Each one of those are kind of at a different life cycle stage and a different opportunity for growth, so it's hard to generalize across the bundle. The key point is, as a bundle they are running lower than the EMS average. They have the ability to run a pretty good notch above the EMS level and I think some of the revenue growth that we're seeing right now, if that continues for another couple of quarters, we will actually see those component levels exceed the EMS average. But it's hard to generalize because each one of them is so different and it's such different stages of life cycle and investment in them. But I think the key this is they are below EMS levels now. They certainly should result in something much better than EMS levels and if we continue to see the growth that we're seeing over the next two quarters we would certainly expect them to overachieve the EMS levels next year.

As high as double digit or is that out of the question?

Double digit is too high.

Your next question comes from Sean Hannan - Needham & Company. Sean Hannan - Needham & Company: Just a question on the computing environment. Many of your customers have certainly argued that we are on a cusp of a refresh cycle. So I just wanted to see if I could get your perspective, basically current relationships, notebook waves, ramps, etc. Can you comment on how you feel your position to benefit from this dynamic as we look to counter 2010, and to what degree can this really be incremental beyond how you've been thinking about the notebook portion of your business to date?

That's tough but when we think about the notebook business our success and failures is built around winning a few programs and then the success of those programs in the marketplace, as opposed to the general market. So in other words, our computing business, our notebook business is going to be up 100% this year and I would expect it to be up another 100% next year. And that's not because the market's up 100% it's just because we're new to this industry and our ability to penetrate these individual products and the success of those individual products are driving us more than anything else. Now, granted, some of the success with individual products will be base on what's happening in the industry. But we hear the same thing in terms of the upgrade cycle. We think it's positive for us as we go into next year. We are pretty thrilled that we're in the business. We're having pretty good success across the broad range of different product categories, so again, we have expanded beyond notebooks into other things. And we are having a good success with the OEMs. So if there is an upgrade cycle, it will benefit us. And if there's not an upgrade cycle we will still expect to grow substantially more than the industry will. Sean Hannan - Needham & Company: If we were to look at that business today, clearly you've been targeting industry margins for the businesses as we get out to a greater scale. Can you comment today around how that business is contributing to the overall?

Yes, so I would say it's not contributing and we would expect it to contribute, perhaps if it hits the 2.0 billion run rate, I expect it to contribute and I expect it to contribute at higher rates, or maybe industry average rates, maybe when we get up to the 4.0 billion[?] to 5.0 billion[?] run rates. So I would say the contribution is very low and zero today, actually, and I would expect it to increase substantially over the next two years. Sean Hannan - Needham & Company: So when you say zero, do you mean that we are break even?

Yes.

Your next question comes from Steven Fox - Calyon Securities (USA).

I was wondering if you could drill down a little bit into the margin improvement, quarter-over-quarter? How much of the roughly 100 basis point improvement was due to the improvements in the vertical and the components margins?

Improvements, September over June, like I said, a large part of it was the restructuring. We certainly had a significant amount from that. But the revenue and mix change a lot and that contributed a lot, also. So I would say roughly two-thirds revenue and mix and one-third from restructuring.

And when you say mix, that’s mainly because of the print and circuit boards and other components improving or is it also by segment market?

No, it's by segment as well, whether it's the verticals or the segments themselves and the revenues. I can't break it down any further than that, but it contributed to roughly two-thirds.

If I could look at it one other way, going forward, on the component business, after you get through the last of the restructuring, would that be the biggest driver in margin improvement? Or do the assembly margins still have room to grow?

The assembly margins, they have room to grow but verticals have a lot more room to grow but they contribute considerably less dollars, of course. Percentage-wise, they have a long way to go.

Your final question comes from Shawn Harrison - Longbow Research.

Just a follow-up on the components question. Would it suffice to say that the key driver in just the continued recovery in that business would be your continued traction within the notebook computing business or are there other end markets and verticals that we should focus on as drivers of upside there as well?

I think the recovery is more an industry recovery than it is anything else. A huge percentage of these components now compete on the open market and are not dependent on Flextronics wins to be successful. So every time we do a vertical, whether it's a camera module or a printer circuit board or a flex circuit or a touch screen or an LCD display or a charger, or any of our power systems, they are all structured to compete openly in the marketplace. So what is a more important driver is actually not Flextronics, the more important driver is just the general recovery of the industry itself. Be these are all very, very big businesses and they are not only serving Flextronics and in fact, Flextronics is a lower percentage of the total mix as opposed to outside industry sales. So that's really what's going to drive their success more than anything else. And what we're seeing is a general recovery of all the markets, and as a result, all of our vertical technologies are generally recovering as well, both from a revenue standpoint, as well as a margin standpoint.

And as a brief follow-up, you mentioned a number of new program wins, is it the outsourcing pipeline that you're seeing expanding our are you taking market share and taking programs that were at competitors?

Again a tough question. We have so many different businesses and so many different business units. If we're growing out notebook business 100% we will obviously have more market share than we are growing market share. Alternatively, the business is expanding and we are getting some of that expansion. I think the answer is just a little bit of everything. Sometimes we take a little bit of market share, sometimes we have just some new product expansions that we're participating in. It's just a broad base business with so many different market segments and so many different businesses, the answer is just a little bit of everything that ends up driving this. One comment I want to make is we are not required to take market share in order to grow the revenue in this company. As we have expanded into things like power and we've expanded things into medical disposables, like the Slomedical that we've just announced, as we think about going into different plastics technologies like mechanicals or some of the machining technologies or the expansion of our power technologies where we're moving all the way into server and higher-end power supplies, and as well all the different notebooks that we've brought out, not just notebooks, but notebooks, desktops, all in ones, all this is expanding [inaudible] market for Flextronics and allows us to participate in revenue growth without having to take just individual market share from some other companies. Alternatively, we try to make the offering as competively as we possibly can and we try to do that as well. But the revenue of the company is not contingent upon taking that market share, it's just an additional opportunity. Thanks everyone for attending, we appreciate it, and we will look forward to seeing you people at the analyst day in November and look forward to a more detailed discussion at that time.

This concludes today’s conference call.