Fitch: Solectron stable

Fitch Ratings said it has affirmed Solectron Corp.'s BB- senior unsecured debt, BB+ senior secured bank credit facility, and the remaining B adjustable conversion rate equity security units.

The outlook is changed to stable from negative.

Fitch said the stable outlook reflects Solectron's improved financial performance, a more stable demand environment across key-end markets, and the company's progress related to asset sales.

Fitch said Solectron's ratings continue to reflect relatively weak albeit improving operating margins, driven by a continued competitive pricing environment and less than optimal capacity utilization rates, and a cash conversion cycle that lags those of its peers.

Positively, the ratings are supported by Solectron's top tier position within the EMS industry, with significant scope and global footprint of operations, a lower revenue break-even point resulting from a combination of past restructuring and asset divestitures, a solid liquidity profile, and a manageable maturity schedule.

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