Benchmark Electronics Earnings Disappoint on Weakened Demand

Benchmark Electronics BHE reported revenue of $614mil in-line with the mid-point of guidance ($590mil to $630mil) and street expectations of $611mil. Management noted strength in the quarter for Test & Instrumentation, Industrial and Medical. Conversely, BHE noted disappointing demand trends in Computing and Telecommunications. Benchmark reported better-than-expected EPS of $0.38 vs. the street at $0.35 and guidance of $0.33- $0.36. BHE guided Q4 revenues to be in the range $590-$630mil, below consensus expectation of $642mil. The company guided EPS to $0.33-$0.37, again below street estimate of $0.37. December guidance reflects continued caution in computing and telco segments. After missing two quarters in a row on revenues, the company met consensus expectations (set quite conservative) and reported a slight EPS beat; BHE's medical segment is ramping several new programs and management guided toward sequential growth in Q4. Negative risks include new computing programs which were announced in 1H'10 have been pushed out; 2) Q4 Revenue/EPS guidance was below street expectations, reflecting softness in Computing & Telco demand. BHE is trading lower at $16.49