SAN JOSE -- Flextronics, the world's second-largest contract electronics manufacturer, said fiscal first-quarter net income was $118.2 million, up from a loss of $154 million last year.

Sales for the quarter ended July 2 hit $6.6 billion, up 13.7% on solid growth across its entire portfolio of businesses.

The firm's Multek printed circuit board business improved during the quarter and company officials forecast "significant year-over-year growth" the remainder of the year. The unit's book-to-bill ratio is 1.2 for the past year. While estimating Multek's revenues as up 25% year-on-year, the company still sees a "need to drive the volume more," CEO Mike McNamara told analysts on a conference call last night.

"In fiscal 2011, we expect higher revenues at Multek than we’ve ever achieved in the past. [Sales are] actually passing the 2008 and the 2009 levels," McNamara said.

The company said component shortages impacted revenues by about $200 million. Inventory at quarter's end had risen $445 million, up 15% sequentially, while inventory turns improved to eight turns from 7.9.

GAAP operating income, which includes stock option expense, was $175 million, up 30% versus the prior quarter. A year-ago the company had GAAP operating income of $10 million.

Adjusted operating margin was 2.9%, up 130 basis points from last year.

Cash conversion rose three days to 14 days, five less than a year ago. Cash flow from operations was $89 million during the quarter.

McNamara said that customers are showing "a lot more interest" in regions outside of China as wage rates and other factors have dampened enthusiasm there. "Over the last four, five years, the labor rate in Mexico has been extremely stable and it really hasn’t changed at all, whereas the cost in China has continued to go up," he said. "Indonesia and Malaysia arguably in many products [have] a lower cost than the China today." He said the company estimates its average wage increases across its 10 sites in China is 20% or 30%.

He added that customer diversification also is playing a role. "I think customers are looking to diversify at China a little bit more. ... We’re having a quite a bit of increased interest in those regions, we’re talking more about bringing on more customers into that area."

Still, he called future relocation of programs "a tweak, not a dislocation of business."