1/25/2007

WSJ.com

By Andrew Edwards

DOW JONES NEWSWIRES

New York (Dow Jones)--Plexus Corp.'s (PLXS) shares fell 15% Thursday, the day after the company released weak second-quarter guidance, partly on uncertainty over a contract to provide roadside bomb-detection gear to the U.S. military.

After the market close Wednesday, the Neehah, Wis., electronics-manufacturing company said it expects fiscal second-quarter per-share earnings of 15 cents to 19 cents on revenue of $345 million to $355 million.

On average, analysts had been expecting per-share earnings of 35 cents on revenue of $396.2 million, according to a poll by Thomson Financial.

Plexus' shares were recently down $3.10, or 15% at $18.12, with nearly six times the average daily volume of shares traded.

Analysts said Plexus is in limbo on a contract to build devices to detect the so-called Improvised Explosive Devices, or IEDs, used against U.S. and allied forces in Iraq.

Longbow Research analyst Shawn Harrison said Plexus has received component-purchase orders, but hasn't received the go-ahead for manufacturing yet.

The contract had driven sales in the last half of 2006, adding $60 million to revenue over two quarters, Harrison said.

But now, with opposition mounting to the Iraq war in the Democrat-controlled congress, the contract's future, which had looked all but assured, has been called into question.

"It's all up to Uncle Sam," JPMorgan analyst Thomas Dinges wrote in a note.

A spokesman for Plexus wasn't immediately available elaborate.

On top of its defense contract woes, the company also faces an inventory correction in their medical-device segment, expecting a double-digit sequential decline in second-quarter medical sales.

The company said the decline was partly attributable to a major, unnamed medical customer accidentally making a double order.